We study a common value auction in which two bidders compete for an item the value of which is a function of three independent characteristics. Each bidder observes one of these characteristics, but one of them is 'naive' in the sense that he does not realize the other bidder's signal contains...

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...