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Auctions with Signaling Concerns

Olivier Bos and Tom Truyts

No 8650, CESifo Working Paper Series from CESifo

Abstract: We study a symmetric private value auction with signaling, in which the auction outcome is used by an outside observer to infer the bidders’ types. We elicit conditions under which an essentially unique D1 equilibrium bidding function exists in the second-price auction and the English auction. We establish there is no equivalence between these two auction designs, neither in bidding strategies nor in expected revenue. This is because the presence or absence of an increasing price clock, affects signaling incentives differently in both auction formats, and thereby also the bidders’ incentives to overbid their types. This leads to a strictly higher expected revenue in the second-price auction than in the English auction. Our analysis is completed by a comparison with other disclosure policies. Applications include art auctions and charity auctions.

Keywords: costly signalling; D1 criterion; social status; art auctions; charity auctions (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cul, nep-des, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

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Related works:
Journal Article: Auctions with signaling concerns (2021) Downloads
Working Paper: Auctions with Signaling Concerns (2017) Downloads
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