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Information feedback in first price auctions

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  • Ignacio Esponda

Abstract

I apply the notion of a self‐confirming equilibrium (SCE) to study how feedback in first price auctions influences bidders' perceptions about their strategic environment, and consequently their bidding behavior. In a private values setting, revealing the two highest bids at the end of each auction is sufficient for bidders to have correct beliefs (justifying the assumption of Nash equilibrium). In contrast, in every symmetric SCE of a symmetric, affiliated, private values model, bidding strategies and revenue are (weakly) higher if only the highest bid is revealed. I also consider interdependent valuations and discuss implications for the empirical auction literature.

Suggested Citation

  • Ignacio Esponda, 2008. "Information feedback in first price auctions," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 491-508, June.
    • Handle: RePEc:bla:randje:v:39:y:2008:i:2:p:491-508
    DOI: 10.1111/j.0741-6261.2008.00024.x
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    Citations

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    Cited by:

    1. Zacharias Maniadis, 2008. "Essays in Aggregate Information, The Media and Special Interests," Levine's Working Paper Archive 122247000000002258, David K. Levine.
    2. Philippe Jehiel & Laurent Lamy, 2015. "On absolute auctions and secret reserve prices," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 241-270, June.
    3. Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
    4. Fudenberg, Drew & Lanzani, Giacomo & Strack, Philipp, 2023. "Pathwise concentration bounds for Bayesian beliefs," Theoretical Economics, Econometric Society, vol. 18(4), November.
    5. Carrillo, Juan & Brocas, Isabelle & Castro, Manuel, 2010. "The nature of information and its effect on bidding behavior: laboratory evidence in a common value auction," CEPR Discussion Papers 7848, C.E.P.R. Discussion Papers.
    6. ,, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.
    7. Helmuts Āzacis, 2020. "Information disclosure by a seller in sequential first-price auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(2), pages 411-444, June.
    8. Fudenberg, Drew & Lanzani, Giacomo, 2023. "Which misspecifications persist?," Theoretical Economics, Econometric Society, vol. 18(3), July.
    9. Gretschko, Vitali & Mass, Helene, 2024. "Worst-case equilibria in first-price auctions," Theoretical Economics, Econometric Society, vol. 19(1), January.
    10. Frédéric Koessler & Marieke Pahlke, 2023. "Feedback Design in Strategic-Form Games with Ambiguity Averse Players," Working Papers halshs-04039083, HAL.
    11. Zacharias Maniadis, 2014. "Selective revelation of public information and self-confirming equilibrium," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(4), pages 991-1008, November.
    12. Iftekhar, Md Sayed & Tisdell, John G., 2015. "Bidding and performance in multiple unit combinatorial fishery quota auctions: Role of information feedbacks," Marine Policy, Elsevier, vol. 62(C), pages 233-243.
    13. Ariel Pakes, 2008. "Theory and Empirical Work on Imperfectly Competitive Markets," NBER Working Papers 14117, National Bureau of Economic Research, Inc.

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