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Successful Uninformed Bidding

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Author Info
Angel Hernando-Veciana (University College London)

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Abstract

This paper studies multiunit common value auctions with informed and less informed bidders. We show that bidders with less information can bid very aggressively and do surprisingly well in terms of probability of winning and expected revenue. We also show that the degree of aggressiveness and success of bidders with less information is positively related to the number of units for sale. We explain these phenomena in terms of the balance of the winner's curse and the loser's curse and their differential effect on bidders with different quality of information.

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File URL: http://fmwww.bc.edu/RePEc/es2000/0791.pdf
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Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0791.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0791

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Holt, Charles A & Sherman, Roger, 1994. "The Loser's Curse," American Economic Review, American Economic Association, vol. 84(3), pages 642-52, June. [Downloadable!] (restricted)
  2. Levin, Dan & Harstad, Ronald M., 1986. "Symmetric bidding in second-price, common-value auctions," Economics Letters, Elsevier, vol. 20(4), pages 315-319. [Downloadable!] (restricted)
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  3. Arupratan Daripa, 1996. "Multi-Unit Auctions Under Proprietary Information: Information Free Rides and Revenue Banking," Archive Working Papers 015, Birkbeck, The Institute for Financial Research.
  4. Engelbrecht-Wiggans, Richard & Milgrom, Paul R. & Weber, Robert J., 1983. "Competitive bidding and proprietary information," Journal of Mathematical Economics, Elsevier, vol. 11(2), pages 161-169, April. [Downloadable!] (restricted)
  5. Wolfgang Pesendorfer & Jeroen M. Swinkels, 1997. "The Loser's Curse and Information Aggregation in Common Value Auctions," Econometrica, Econometric Society, vol. 65(6), pages 1247-1282, November.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ángel Hernando Veciana, 2006. "Information Acquisition In Auctions: Sealed Bids Vs. Open Bids," Working Papers. Serie AD 2006-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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  2. Boone, J. & Goeree, Jacob K., 2005. "Optimal privatization using qualifying auctions," Discussion Paper 72, Tilburg University, Center for Economic Research. [Downloadable!]
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  3. Arup Daripa, 2005. "Informational Free Rides in Uniform Price Auctions: Exception or Norm?," Microeconomics 0511007, EconWPA. [Downloadable!]
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