Successful uninformed bidding
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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- Bikhchandani, Sushil & Riley, John G., 1991. "Equilibria in open common value auctions," Journal of Economic Theory, Elsevier, vol. 53(1), pages 101-130, February.
- Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-943, June.
- Holt, Charles A & Sherman, Roger, 1994. "The Loser's Curse," American Economic Review, American Economic Association, vol. 84(3), pages 642-652, June.
- Milgrom, Paul & Weber, Robert J., 1982.
"The value of information in a sealed-bid auction,"
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- 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.
- Harstad, Ronald M., 1991.
"Asymmetric bidding in second-price, common-value auctions,"
Elsevier, vol. 35(3), pages 249-252, March.
- Levin, Dan & Harstad, Ronald M., 1986. "Symmetric bidding in second-price, common-value auctions," Economics Letters, Elsevier, vol. 20(4), pages 315-319.
- Wolfgang Pesendorfer & Jeroen M. Swinkels, 1997.
"The Loser's Curse and Information Aggregation in Common Value Auctions,"
Econometric Society, vol. 65(6), pages 1247-1282, November.
- Wolfgang Pesendorfer & Jeroen M. Swinkels, 1995. "The Loser's Curse and Information Aggregation in Common Value Auctions," Discussion Papers 1147, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Arupratan Daripa, 1996. "Multi-Unit Auctions Under Proprietary Information: Information Free Rides and Revenue Banking," Archive Working Papers 015, Birkbeck, Department of Economics, Mathematics & Statistics.
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