Strategic Behavior in Dynamic Auctions

Ruqu Wang ()

Economic Theory, 1993, vol. 3, issue 3, 16 pages

Abstract: In this paper, we study a two-period common-value auction model in which the seller possesses some private information about the value of the object being sold. Assuming that buyers possess no private information in the first period, we characterize a set of equilibria in which the strategy of the seller is equivalent to a decision of whether to sell the object in the first or the second period with no reserve price. The seller sells in the second period if and only if the information is favorable enough. We also show that revealing private information increases the seller's profit in some equilibria, but not in others. One implication is that the seller's ability to sell on more occasions reduces his expected revenue under certain conditions.

Date: 1993
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