We consider an auction in which the behavior of one potential bidder departs mildly from full rationality. We show that the presence of such an inexpert bidder can be enough to discourage all of an infinitely large population of fully rational potential bidders from entering an auction....

This paper presents an equilibrium explanation for the persistence of naive bidding. Specifically, we consider a common value auction in which a "naive" bidder (who ignores the Winner's Curse) competes against a fully rational bidder (who understands that her rival is not). We show that the...

We present results of several experiments that deal with endogenous entry in auctions and auction valuation. One observation that is constant across all of the experiments we report is that laboratory subjects have a difficult time evaluating potential gains from auctions. Even after they are...

Recent auction theory and experimental results document strategic demand reduction by bidders in uniform-price auctions. The present article extends this area of research to consider the effects of varying the number of bidders. Our theoretical model predicts that demand reduction should...

Unlike standard auctions, we show that competitive procurement may optimally limit competition or use inefficient allocation rules that award the project to a less efficient firm with positive probability. Procurement projects often involve ex post moral hazard after the competitive process is...

In this note we examine four standard multi-unit sealed-bid auctions in the presence of synergy. The structure of the equilibrium bidding strategy under each rule is quite intuitive. Whether the equilibrium involves "bundle-bidding" or "separating-bidding" strategy depends on the presence of the...

In this note we examine four standard multi-unit sealed-bid auctions in the presence of synergy. The structure of the equilibrium bidding strategy under each rule is quite intuitive. Whether the equilibrium involves "bundle-bidding" or "separating-bidding" strategy depends on the presence of the...

There are a number of examples in the auction literature (Perry and Reny, 1999, and Krishna, 2002) where releasing the seller's private information can lead to a lowering of expected revenue. On the other hand, releasing information always increases welfare. Levin and Smith (1994) point out that...

There are a number of examples in the auction literature (Perry and Reny, 1999, and Krishna, 2002) where releasing the seller's private information can lead to a lowering of expected revenue. On the other hand, releasing information always increases welfare. Levin and Smith (1994) point out that...

Unlike standard auctions, we show that competitive procurement may optimally limit competition or use inefficient allocation rules that award the project to a less efficient firm with positive probability. Procurement projects often involve ex post moral hazard after the competitive process is...