Information advantage and dominant strategies in second-price auctions
We study a general model of common-value second-price auctions with differential information. We show that one of the bidders has an information advantage over the other bidders if and only if he possesses a dominant strategy. A dominant strategy is, in fact, unique, and is given by the conditional expectation of the common value with respect to his information field. Furthermore, when a bidder has information advantage, other bidders cannot make a profit.
|Date of creation:||00 Nov 2000|
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- Robert Wilson, 1977. "A Bidding Model of Perfect Competition," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 511-518.
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