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Informed entry in auctions

Author

Listed:
  • Diego Aycinena

    (Universidad del Rosario)

  • Hernán Bejarano

    (Chapman University
    Centro de Investigación y Docencia Económicas)

  • Lucas Rentschler

    (Utah State University)

Abstract

We examine entry decisions in first-price and English clock auctions with participation costs. Potential bidders observe their value and report maximum willingness to pay (WTP) to participate. Entry occurs if revealed WTP (weakly) exceeds the randomly drawn participation cost. We find no difference in WTP between auction formats, although males have a higher WTP for first-price auctions. WTP is decreasing in the number of potential bidders, but this reduction is less than predicted and small in magnitude.

Suggested Citation

  • Diego Aycinena & Hernán Bejarano & Lucas Rentschler, 2018. "Informed entry in auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 175-205, March.
  • Handle: RePEc:spr:jogath:v:47:y:2018:i:1:d:10.1007_s00182-017-0583-9
    DOI: 10.1007/s00182-017-0583-9
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    2. J.M.J. Delnoij & K.J.M. De Jaegher, 2016. "Competing first-price and second-price auctions," Working Papers 16-07, Utrecht School of Economics.
    3. Aycinena, Diego & Rentschler, Lucas, 2019. "Entry in contests with incomplete information: Theory and experiments," European Journal of Political Economy, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Auctions; Endogenous entry; Experiments; Bidding;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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