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Uninformed Bidding in Sequential Auctions

Author

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  • Lorenzon Emmanuel

    (CNRS, INRAE, Grenoble INP, GAEL, Université Grenoble Alpes, Grenoble, 38000, France)

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. The buyers have multiunit demand and are asymmetrically informed at the ex ante stage of the game. One buyer perfectly knows his type, and the other buyer is uninformed about her own type. We consider interim information acquisition by the uninformed buyer and derive an asymmetric equilibrium that is shown to produce a declining price sequence across both sales. The supermartingale property of the price sequence stems from the uninformed buyer’s incentives to gather private information, which leads to aggressive bidding in the first-stage auction.

Suggested Citation

  • Lorenzon Emmanuel, 2023. "Uninformed Bidding in Sequential Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 23(1), pages 155-179, January.
    • Handle: RePEc:bpj:bejtec:v:23:y:2023:i:1:p:155-179:n:17
    DOI: 10.1515/bejte-2021-0009
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    More about this item

    Keywords

    sequential auctions; uninformed bidding; multiunit 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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