Creating a winner’s curse via jump bids

David Ettinger () and Fabio Michelucci

Review of Economic Design, 2016, vol. 20, issue 3, No 1, 173-186

Abstract: Abstract We show that jump bids can be used by a bidder to create a winner’s curse and preserve an informational advantage that would otherwise disappear in the course of an open ascending auction. The effect of the winner’s curse is to create allocative distortions and reduce the seller’s expected revenue. Two novel features of equilibrium jump bids are derived. First, the jump bid may fail to hide completely the value of the common value component. Second, a bidder with a higher type might jump bid less frequently than a bidder with a lower type.

Keywords: Auctions; Efficiency; Jump bids; Winner’s curse (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Working Paper: Creating a winner's curse via jump bids (2016)
Working Paper: Creating a Winner's Curse via Jump Bids (2015)
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DOI: 10.1007/s10058-016-0187-z

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