A communication equilibrium in English auctions with discrete bidding
AbstractThis paper analyses a model of a common value English auction with discrete bidding. In this model, we show that there exists a communication equilibrium in which the high signal bidder strategically chooses his first bid so as to maximise his expected utility. Straightforward bidding, or increasing the bid by the minimum amount possible, is the equilibrium strategy for both bidders in all other auction rounds. We relate this result to recent research on English auctions with discrete bidding and auctions where bidders may have noisy information about their opponent's signals.
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Bibliographic InfoPaper provided by Faculdade de Economia e Gestão, Universidade Católica Portuguesa (Porto) in its series Working Papers de Economia (Economics Working Papers) with number 042008.
Length: 17 pages
Date of creation: Jun 2008
Date of revision:
English Auctions; discrete bidding; communication equilibrium;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-13 (All new papers)
- NEP-CTA-2008-06-13 (Contract Theory & Applications)
- NEP-GTH-2008-06-13 (Game Theory)
- NEP-MKT-2008-06-13 (Marketing)
- NEP-UPT-2008-06-13 (Utility Models & Prospect Theory)
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