Affiliated Common Value Auctions with Differential Information: The Two Bidder Case

Parreiras Sergio O. ()
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Parreiras Sergio O.: University of North Carolina, Chapel Hill

The B.E. Journal of Theoretical Economics, 2006, vol. 6, issue 1, 21

Abstract: I study affiliated, pure common-value auctions with ex-ante asymmetric buyers. For the two-buyer case I characterize and prove uniqueness of the equilibrium of hybrid auctions where the payment is a weighted average of the highest and second-highest bids. A recursive method to explicitly compute the equilibrium is presented. It is shown that any hybrid auction yields at least as much revenue as the first-price auction. In particular, the equilibrium of the second-price auction, obtained in the limit by letting the weight of the highest bid go to zero, revenue-dominates the first-price auction.

Keywords: auctions; asymmetric information; differential information; revenue-ranking; linkage-principle (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (12)

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DOI: 10.2202/1534-5971.1304

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