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Hiding Information in Open Auctions

Author

Listed:
  • David Ettinger
  • Fabio Michelucci

Abstract

We analyze the rationale for hiding information in open auction formats. In particular, we focus on the incentives for a bidder to call a price higher than the highest standing one in order to prevent the remaining active bidders from aggregating more accurate information that could be gathered by observing the exact drop out values of the exiting bidders. Necessary conditions for the existence of jump bids with such motivations are provided. Finally, we show that there is no clear-cut effect of jump bids on efficiency and expected revenue and introduce several specific results.

Suggested Citation

  • David Ettinger & Fabio Michelucci, 2012. "Hiding Information in Open Auctions," CERGE-EI Working Papers wp469, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp469
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    References listed on IDEAS

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    1. Bernhardt, Dan & Scoones, David, 1993. "Promotion, Turnover, and Preemptive Wage Offers," American Economic Review, American Economic Association, vol. 83(4), pages 771-791, September.
    2. Michael J. Fishman, 1988. "A Theory of Preemptive Takeover Bidding," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 88-101, Spring.
    3. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, September.
    4. Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 185-210.
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    Citations

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    Cited by:

    1. David Ettinger & Fabio Michelucci, 2016. "Creating a winner’s curse via jump bids," Review of Economic Design, Springer;Society for Economic Design, vol. 20(3), pages 173-186, September.
    2. Gonçalves, Ricardo & Ray, Indrajit, 2017. "Partition Equilibria in a Japanese-English Auction with Discrete Bid Levels for the Wallet Game," CRETA Online Discussion Paper Series 34, Centre for Research in Economic Theory and its Applications CRETA.
    3. repec:dau:papers:123456789/15048 is not listed on IDEAS
    4. Ray, Indrajit & Gonçalves, Ricardo, 2016. "Equilibria in a Japanese-English Auction with Discrete Bid Levels for the Wallet Game," Cardiff Economics Working Papers E2016/13, Cardiff University, Cardiff Business School, Economics Section.

    More about this item

    Keywords

    auctions; efficiency; jump bids;

    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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