Information feedback in first price auctions
AbstractI 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. Copyright (c) 2008, RAND.
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Bibliographic InfoArticle provided by RAND Corporation in its journal The RAND Journal of Economics.
Volume (Year): 39 (2008)
Issue (Month): 2 ()
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- Ariel Pakes, 2008. "Theory and Empirical Work on Imperfectly Competitive Markets," NBER Working Papers 14117, National Bureau of Economic Research, Inc.
- Zacharias Maniadis, 2008. "Essays in Aggregate Information, The Media and Special Interests," Levine's Working Paper Archive 122247000000002258, David K. Levine.
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122247000000001547, UCLA Department of Economics.
- Brocas, Isabelle & Carrillo, Juan D & 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.
- Christoph March, 2011. "Adaptive social learning," PSE Working Papers halshs-00572528, HAL.
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