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A communication equilibrium in English auctions with discrete bidding

Author

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  • Ricardo Gonçalves

    (Faculdade de Economia e Gestão - Universidade Católica Portuguesa - Porto)

Abstract

This paper analyses a model of a common value English auction with discrete bidding. In this model, we show that there exists a communication equilibrium in which the high signal bidder strategically chooses his first bid so as to maximise his expected utility. Straightforward bidding, or increasing the bid by the minimum amount possible, is the equilibrium strategy for both bidders in all other auction rounds. We relate this result to recent research on English auctions with discrete bidding and auctions where bidders may have noisy information about their opponent's signals.

Suggested Citation

  • Ricardo Gonçalves, 2008. "A communication equilibrium in English auctions with discrete bidding," Working Papers de Economia (Economics Working Papers) 042008, Católica Porto Business School, Universidade Católica Portuguesa.
  • Handle: RePEc:cap:wpaper:042008
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    References listed on IDEAS

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    Cited by:

    1. Ménager, Lucie, 2017. "Pre-play communication in procurement auctions: Silence is not golden," Journal of Mathematical Economics, Elsevier, vol. 71(C), pages 1-13.
    2. Lucie Ménager, 2015. "Pre-play communication in procurement auctions: silence is not golden," Working Papers hal-00856078, HAL.

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    More about this item

    Keywords

    English Auctions; discrete bidding; communication equilibrium;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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