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Successful Uninformed Bidding

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Author Info
Ángel Hernando Veciana () (Universidad de Alicante)

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Abstract

This paper provides some striking results that arise in the unique symmetric equilibrium of common value multiunit auction in which some bidders are better informed than others. We show that bidders with worse information can do surprisingly well: They can win with higher probability than better informed bidders, and sometimes, even with higher expected utility. We also find a positive relationship between the success of worse informed bidders and the number of units for sale. Finally we argue that the correct intuitive explanation of these results relies on the balance of the winner's curse and the loser's curse effects.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2001-06.pdf
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File Function: Fisrt version / Primera version, 2001
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Publisher Info
Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2001-06.

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Length: 30 pages
Date of creation: Mar 2001
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2001-06

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Related research
Keywords: asymmetric bidders; common value; winner¿s curse; loser¿s curse.;

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

References listed on IDEAS
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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Cited by:
(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. Boone, Jan & Goeree, Jacob K., 2005. "Optimal Privatization Using Qualifying Auctions," CEPR Discussion Papers 5118, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. 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!]
    Other versions:
  3. Arup Daripa, 2005. "Informational Free Rides in Uniform Price Auctions: Exception or Norm?," Microeconomics 0511007, EconWPA. [Downloadable!]
    Other versions:
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