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Costly Signalling in Auctions -super-1

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  • Johannes H�rner
  • Nicolas Sahuguet

Abstract

This paper analyses a dynamic auction in which a fraction of each bid is sunk. Jump bidding is used by bidders to signal their private information. Bluffing (respectively sandbagging) occurs when a weak (respectively strong) player seeks to deceive his opponent into thinking that he is strong (respectively weak). A player with a moderate valuation bluffs by making a high bid and drops out if his bluff is called. A player with a high valuation should vary his bids and should sometimes sandbag by bidding low, to induce lower bids by his rival. Copyright 2007, Wiley-Blackwell.

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File URL: http://hdl.handle.net/10.1111/j.1467-937X.2007.00418.x
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Bibliographic Info

Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 74 (2007)
Issue (Month): 1 ()
Pages: 173-206

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Handle: RePEc:oup:restud:v:74:y:2007:i:1:p:173-206

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Cited by:
  1. J. Atsu Amegashie, 2009. "Incomplete Property Rights and Overinvestment," Working Papers, University of Guelph, Department of Economics and Finance 0902, University of Guelph, Department of Economics and Finance.
  2. J. Atsu Amegashie, 2005. "Signaling In A Dynamic Contest With Boundedly Rational Players," Working Papers, University of Guelph, Department of Economics and Finance 0510, University of Guelph, Department of Economics and Finance.
  3. Münster, Johannes, 2008. "Repeated contests with asymmetric information," Discussion Papers, Research Unit: Market Processes and Governance, Social Science Research Center Berlin (WZB) SP II 2008-08, Social Science Research Center Berlin (WZB).
  4. Roland Hodler & Simon Loertscher & Dominic Rohner, 2010. "Biased Experts, Costly Lies, and Binary Decisions," Working Papers, Swiss National Bank, Study Center Gerzensee 10.01, Swiss National Bank, Study Center Gerzensee.
  5. J. Atsu Amegashie, 2005. "Asymmetry And Collusion In Infinitely Repeated Contests," Working Papers, University of Guelph, Department of Economics and Finance 0509, University of Guelph, Department of Economics and Finance.
  6. James W. Roberts & Andrew Sweeting, 2011. "When Should Sellers Use Auctions?," NBER Working Papers 17624, National Bureau of Economic Research, Inc.
  7. repec:hal:wpaper:halshs-00564888 is not listed on IDEAS
  8. Laurent Lamy, 2010. ""Upping the ante": How to design efficient auctions with entry?," PSE Working Papers, HAL halshs-00564888, HAL.
  9. David Grether & David Porter & Matthew Shum, 2011. "Intimidation or Impatience? Jump Bidding in On-line Ascending Automobile Auctions," Working Papers, Chapman University, Economic Science Institute 11-07, Chapman University, Economic Science Institute.
  10. Jun Zhang, 2008. "Simultaneous Signaling in Elimination Contests," Working Papers, Queen's University, Department of Economics 1184, Queen's University, Department of Economics.
  11. J. Atsu Amegashie, 2009. "Third-Party Intervention in Conflicts and the Indirect Samaritan's Dilemma," CESifo Working Paper Series, CESifo Group Munich 2695, CESifo Group Munich.
  12. Osório Costa, Antonio Miguel, 2010. "Signaling in Dynamic Contests: Some Impossibility Results," Working Papers, Universitat Rovira i Virgili, Department of Economics 2072/151621, Universitat Rovira i Virgili, Department of Economics.

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