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Uninformed Bidding in Sequential Auctions

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  • Emmanuel LORENZON

Abstract

We consider a private value auction with one-sided incomplete information in which two objects are sold in a sequence of two second-price auctions. Buyers have multi-unit demands and both are asymmetrically informed at the ex-ante stage of the game. One buyer perfectly knows his type and the other is uninformed about his own type. We con-sider interim information acquisition for the uninformed buyer and derive an asymmetric equilibrium which is shown to produce a declining price sequence across both sales. The supermartingale property of the price sequence stems from the uninformed buyer’s incen-tives to gather private information which leads to an aggressive bidding at the first-stage auction.

Suggested Citation

  • Emmanuel LORENZON, 2020. "Uninformed Bidding in Sequential Auctions," Bordeaux Economics Working Papers 2020-20, Bordeaux School of Economics (BSE).
    • Handle: RePEc:grt:bdxewp:2020-20
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    More about this item

    Keywords

    Sequential auctions; Uninformed bidding; Multi-unit demand; Declining price anomaly;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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