A common-value auction with state-dependent participation

Stephan Lauermann () and Asher Wolinsky ()
Additional contact information
Stephan Lauermann: Department of Economics, University of Bonn
Asher Wolinsky: Department of Economics, Northwestern University

Theoretical Economics, 2022, vol. 17, issue 2

Abstract: This paper analyzes a common-value, first-price auction with state-dependent participation. The number of bidders, which is unobservable to them, depends on the true value. For participation patterns with many bidders in each state, the bidding equilibrium may be of a "pooling" type---with high probability, the winning bid is the same across states and is below the ex-ante expected value---or of a "partially revealing" type---with no significant atoms in the winning bid distribution and an expected winning bid increasing in the true value. Which of these forms will arise is determined by the likelihood ratio at the top of the signal distribution and the participation across states. We fully characterize this relation and show how the participation pattern determines the extent of information aggregation by the price.

Keywords: Auction theory; bargaining; competition (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2022-05-05
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://econtheory.org/ojs/index.php/te/article/viewFile/20220841/33816/990 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:the:publsh:3733

Access Statistics for this article

Theoretical Economics is currently edited by Simon Board, Todd D. Sarver, Juuso Toikka, Rakesh Vohra, Pierre-Olivier Weill

More articles in Theoretical Economics from Econometric Society
Bibliographic data for series maintained by Martin J. Osborne ().