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Strategic Implications of Uncertainty Over One’s Own Private Value in Auctions

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  • Eric Rasmusen

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

Suppose a bidder must decide whether and when to incur the cost of estimating his own private value in an auction. This can explain why a bidder might increase his bid ceiling in the course of an auction, and why a bidder would like to know the private values of other bidders. It also can explain sniping — flurries of bids at the end of auctions with deadlines — as the result of other bidders trying to avoid stimulating the uninformed bidder to examine his value.

Suggested Citation

  • Eric Rasmusen, 2004. "Strategic Implications of Uncertainty Over One’s Own Private Value in Auctions," Working Papers 2004-13, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2004-13
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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2004-13-rasmusen.pdf
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    References listed on IDEAS

    as
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    JEL classification:

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

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