Successful Uninformed Bidding
AbstractThis 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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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2001-06.
Length: 30 pages
Date of creation: Mar 2001
Date of revision:
Publication status: Published by Ivie
asymmetric bidders; common value; winner¿s curse; loser¿s curse.;
Other versions of this item:
- Angel Hernando-Veciana, 2000. "Successful Uninformed Bidding," Econometric Society World Congress 2000 Contributed Papers 0791, Econometric Society.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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