We characterize Bayesian Nash equilibria for asymmetric ascending auctions in which both common and private value components are accommodated, and bidders' valuations and signals are drawn from asymmetric distributions. It is shown that the equilibrium inverse bid functions in each round of the auction can be solved from a system of equations formed from bidders' expectations of the value of the object conditional on all information available during that round. The computational tractability of this characterization allows us to analytically solve for the equilibrium bidding strategies in a log-normal model. This forms the basis of an econometric model which we estimate using data from the PCS spectrum auctions run by the U.S. Federal Communications Commission.
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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number
mshum-98-02.
Length: 41 pages Date of creation: 21 Sep 1998 Date of revision: Handle: RePEc:tor:tecipa:mshum-98-02
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Find related papers by JEL classification: C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation D44 - Microeconomics - - Market Structure and Pricing - - - Auctions D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
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.:
Peter Cramton, 2002.
"Spectrum Auctions,"
Papers of Peter Cramton
01hte, University of Maryland, Department of Economics - Peter Cramton, revised 16 Jul 2001.
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