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Reputational Bidding


  • Francesco Giovannoni


  • Miltiadis Makris



We consider auctions where bidders care about the reputational effects of their bidding and argue that the amount of information that is disclosed at the end of the auction will influence bidding. Our analysis focuses on several bid disclosure rules that capture all of the realistic cases. We show that bidders distort their bidding in a way that conforms to stylized facts about takeovers/licence auctions. Also, we rank the disclosure rules in terms of the expected revenues they generate and find that, under certain conditions, full disclosure will not be optimal.

Suggested Citation

  • Francesco Giovannoni & Miltiadis Makris, 2014. "Reputational Bidding," Bristol Economics Discussion Papers 14/641, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:uobdis:14/641

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    • Francesco Giovannoni & Miltiadis Makris, 2014. "Reputational Bidding," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 693-710, August.

    References listed on IDEAS

    1. Timothy Salmon & Bart Wilson, 2008. "Second chance offers versus sequential auctions: theory and behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 34(1), pages 47-67, January.
    2. Goeree, Jacob K., 2003. "Bidding for the future: signaling in auctions with an aftermarket," Journal of Economic Theory, Elsevier, vol. 108(2), pages 345-364, February.
    3. Mezzetti, Claudio & Pekec, Aleksandar Sasa & Tsetlin, Ilia, 2008. "Sequential vs. single-round uniform-price auctions," Games and Economic Behavior, Elsevier, vol. 62(2), pages 591-609, March.
    4. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-661, May.
    5. Das Varma, Gopal, 2003. "Bidding for a process innovation under alternative modes of competition," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 15-37, January.
    6. Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
    7. Yim, Soojin, 2013. "The acquisitiveness of youth: CEO age and acquisition behavior," Journal of Financial Economics, Elsevier, vol. 108(1), pages 250-273.
    8. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January.
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    Cited by:

    1. Azacis, Helmuts, 2017. "Information Disclosure by a Seller in a Sequential First-Price Auction," Cardiff Economics Working Papers E2017/2, Cardiff University, Cardiff Business School, Economics Section.
    2. Bos, Olivier & Truyts, Tom, 2017. "Auctions with Signaling Concerns," MPRA Paper 79181, University Library of Munich, Germany.

    More about this item


    Auctions; signaling; disclosure.;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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