Private Value Perturbations and Informational Advantage in Common Value Auctions

Larson, Nathan

doi:10.2139/ssrn.665121

Cited by 7 publications

(10 citation statements)

References 17 publications

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“…Notable examples include Bikhchandani (1988), Bulow et al (1999), Klemperer (1998), andLarson (2009). 4 Bikhchandani's paper is the closest to our work.…”

Section: Introductionmentioning

confidence: 81%

Bidding in a possibly common-value auction

Fong¹,

Garrett²

2010

Games and Economic Behavior

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JEL classification: D44 D82Keywords: Second-price auction Common value Model uncertaintyWe analyze a second-price auction with two bidders in which only one of the bidders is informed as to whether the object is valued commonly. We show that any equilibrium strategy of the bidder who is uninformed must be part of an equilibrium when both bidders instead know that the auction is not common value, regardless of the way in which the values are different. We derive sufficient conditions for equilibrium existence.

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“…Notable examples include Bikhchandani (1988), Bulow et al (1999), Klemperer (1998), andLarson (2009). 4 Bikhchandani's paper is the closest to our work.…”

Section: Introductionmentioning

confidence: 81%

Bidding in a possibly common-value auction

Fong¹,

Garrett²

2010

Games and Economic Behavior

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“…3 The more important question is whether such is true for "reasonable" equilibria. Our revenue comparison benefits from recent research by Einy et al (2002) and Larson (2009) regarding equilibrium selection in second-price auctions. Einy et al (2002), in a discrete framework more general than ours, select in the second-price auction an equilibrium from the set of all equilibria that use only undominated strategies.…”

Section: Introductionmentioning

confidence: 98%

“…Additionally, the Einy et al selection is the only sophisticated strategy (as in Moulin 1986) for bidders if uninformed bidders are added to the auction. Larson (2009) selects an equilibrium in the second-price common-value auction by slightly perturbing the basic environment with the addition of a "small" private value added to the common value, and then showing there is a unique equilibrium to the perturbed game. Equilibrium in the original second-price auction is then found as the limit as the private-value component shrinks to zero.…”

Section: Introductionmentioning

confidence: 99%

“…Equilibrium in the original second-price auction is then found as the limit as the private-value component shrinks to zero. Our equilibrium selection is that of Einy et al (2002) and coincides with that of Larson (2009). Hausch (1987 investigated the validity of the Milgrom-Weber revenue comparison in asymmetric common-value auctions.…”

Section: Introductionmentioning

confidence: 99%

“…Larson (2009) notes the same issue in selecting the "right" equilibrium. He writes that "…when a bidder, in formulating a best response to her rival's strategy, considers the event of winning [the second-price auction] with a particular price, she is effectively conditioning on full information about the common value.…”

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confidence: 99%

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Equilibrium and revenue in a family of common-value first-price auctions with differential information

Malueg

Orzach

2011

Int J Game Theory

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We study a discrete common-value auction environment with two asymmetrically informed bidders. Equilibrium of the first-price auction is in mixed strategies, which we characterize using a doubly recursive solution method. The distribution of bids for the ex post strong player stochastically dominates that for the ex post weak player. This result complements Maskin and Riley's (Rev Econ Stud 67:413-438, 2000) similar result for asymmetric private-value auctions. Finally, comparison with the dominance-solvable equilibrium in a second-price auction shows the MilgromWeber (Econometrica 50: 1089-1122, 1982a) finding that the second-price auction yields at least as much revenue as the first-price auction fails with asymmetry: in some cases the first-price auction provides greater expected revenue, in some cases less.

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Information acquisition in auctions: Sealed bids vs. open bids

Hernando-Veciana

2009

Games and Economic Behavior

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This paper studies the incentives of a bidder to acquire information in an auction when her information acquisition decision is observed by the other bidders before bidding. Our results show that the sealed bid (second price) auction may induce more information acquisition about a common component of the value than the open (English) auction but less about the private component of the value. Moreover, we show that more information about the private value and less information about the common value may improve efficiency and revenue. Consequently, our results suggest new arguments in favor of the open auction.JEL classification: D41; D44; D82

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Private Value Perturbations and Informational Advantage in Common Value Auctions

Cited by 7 publications

References 17 publications

Bidding in a possibly common-value auction

Bidding in a possibly common-value auction

Equilibrium and revenue in a family of common-value first-price auctions with differential information

Information acquisition in auctions: Sealed bids vs. open bids

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