Advanced Search
MyIDEAS: Login

Private Information in Sequential Common-Value Auctions

Contents:

Author Info

  • Johannes Horner
  • Julian Jamison
Registered author(s):

    Abstract

    We study an infinitely-repeated ?rst-price auction with common values. Initially, bid- ders receive independent private signals about the objects' value, which itself does not change over time. Learning occurs only through observation of the bids. Under one-sided incomplete information, this information is eventually revealed and the seller extracts es- sentially the entire rent (for large discount factors). Both players?payo¤s tend to zero as the discount factor tends to one. However, the uninformed bidder does relatively better than the informed bidder. We discuss the case of two-sided incomplete information, and argue that, under a Markovian re?nement, the outcome is pooling: information is revealed only insofar as it does not affect prices. Bidders submit a common, low bid in the tradition of collusion without conspiracy.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.kellogg.northwestern.edu/research/math/papers/1422.pdf
    File Function: main text
    Download Restriction: no

    Bibliographic Info

    Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1422.

    as in new window
    Length:
    Date of creation: Mar 2006
    Date of revision:
    Handle: RePEc:nwu:cmsems:1422

    Contact details of provider:
    Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
    Phone: 847/491-3527
    Fax: 847/491-2530
    Email:
    Web page: http://www.kellogg.northwestern.edu/research/math/
    More information through EDIRC

    Order Information:
    Email:

    Related research

    Keywords: repeated game with incomplete information; private information; ratchet effect; first-price auction; dynamic auctions;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    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.:
    as in new window
    1. Monderer, Dov & Shlomit Hon-Snir & Aner Sela, 1996. "A Learning Approach to Auctions," Discussion Paper Serie B 388, University of Bonn, Germany.
    2. Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 2001. "The Declining Price Anomaly in Dutch Dutch Rose Auctions," American Economic Review, American Economic Association, vol. 91(4), pages 1055-1062, September.
    3. Maskin, Eric & Riley, John, 2003. "Uniqueness of equilibrium in sealed high-bid auctions," Games and Economic Behavior, Elsevier, vol. 45(2), pages 395-409, November.
    4. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
    5. Victor A. Ginsburgh, 1998. "Absentee Bidders and the Declining Price Anomaly in Wine Auctions," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1302-1331, December.
    6. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    7. Hadiza Moussa Saley & Bernard De Meyer, 2003. "On the strategic origin of Brownian motion in finance," International Journal of Game Theory, Springer, vol. 31(2), pages 285-319.
    8. Marshall, R.C. & Richard J.F., 1995. "Bider Collusion at Forest Service Timber Sales," Papers 7-95-3, Pennsylvania State - Department of Economics.
    9. Caillaud, Bernard & Mezzetti, Claudio, 2004. "Equilibrium reserve prices in sequential ascending auctions," Journal of Economic Theory, Elsevier, vol. 117(1), pages 78-95, July.
    10. Hart, Oliver D & Tirole, Jean, 1988. "Contract Renegotiation and Coasian Dynamics," Review of Economic Studies, Wiley Blackwell, vol. 55(4), pages 509-40, October.
    11. Donald B. Hausch, 1986. "Multi-Object Auctions: Sequential vs. Simultaneous Sales," Management Science, INFORMS, vol. 32(12), pages 1599-1610, December.
    12. Maskin, Eric & Riley, John, 2000. "Equilibrium in Sealed High Bid Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 439-54, July.
    13. Raviv, Yaron, 2006. "New Evidence on Price Anomalies in Sequential Auctions: Used Cars in New Jersey," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 301-312, July.
    14. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February.
    15. Kyle, Albert S, 1985. "Continuous Auctions and Insider Trading," Econometrica, Econometric Society, vol. 53(6), pages 1315-35, November.
    16. Freixas, Xavier & Guesnerie, Roger & Tirole, Jean, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Wiley Blackwell, vol. 52(2), pages 173-91, April.
    17. Ginsburgh, V. & Ours, J.C. van, 2003. "How to Organize Sequential Auctions: Results of a Natural Experiment by Christie's," Discussion Paper 2003-25, Tilburg University, Center for Economic Research.
    18. 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.
    19. Pesendorfer, Martin, 2000. "A Study of Collusion in First-Price Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 381-411, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:nwu:cmsems:1422

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fran Walker).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.