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Information Aggregation in Auctions with an Unknown Number of Bidders

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Abstract

Information aggregation, a key concern for uniform-price, common-value auctionswith many bidders, has been characterized in models where bidders know exactly how many rivals they face. A model allowing for uncertainty over the number of bidders isessential for capturing a critical condition for information to aggregate: as the numbersof winning and losing bidders grow large, information aggregates if and only ifuncertainty about the fraction of winning bidders vanishes. It is possible for the sellerto impart this information by precommitting to a specified fraction of winning bidders,via a proportional selling policy. Intuitively, this makes the proportion of winners known, and thus provides all the information that bidders need to make winners curse corrections.

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  • Ronald M. Harstad & Aleksandar Pekec & Ilia Tsetlin, 2006. "Information Aggregation in Auctions with an Unknown Number of Bidders," Working Papers 0605, Department of Economics, University of Missouri.
    • Handle: RePEc:umc:wpaper:0605
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    1. Matthew O. Jackson & Ilan Kremer, 2006. "The Relevance of a Choice of Auction Format in a Competitive Environment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(4), pages 961-981.
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    Cited by:

    1. Bos, Olivier, 2012. "Wars of attrition and all-pay auctions with stochastic competition," Journal of Mathematical Economics, Elsevier, vol. 48(2), pages 83-91.
    2. Olivier Bos, 2010. "Wars of Attrition with Stochastic Competition," Working Paper Series in Economics 47, University of Cologne, Department of Economics.
    3. Ronald M. Harstad, 2007. "Does a Seller Really Want Another Bidder?," Working Papers 0711, Department of Economics, University of Missouri.
    4. Joy Buchanan & Steven Gjerstad & David Porter, 2016. "Information Effects in Uniform Price Multi‐Unit Dutch Auctions," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 126-145, July.
    5. Stephan Lauermann & Asher Wolinsky, 2021. "A Common-Value Auction with State-Dependent Participation," ECONtribute Discussion Papers Series 103, University of Bonn and University of Cologne, Germany.
    6. Aleksandar Saša Pekev{c} & Ilia Tsetlin, 2008. "Revenue Ranking of Discriminatory and Uniform Auctions with an Unknown Number of Bidders," Management Science, INFORMS, vol. 54(9), pages 1610-1623, September.

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    More about this item

    Keywords

    information aggregation; common-value auctions; uncertain level of competition;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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