Should Auctions Be Transparent?

Dirk Bergemann and Hörner, Johannes
Authors registered in the RePEc Author Service: Johannes Hörner

No 7989, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the role of market transparency in repeated first-price auctions. We consider a setting with private and independent values across bidders. The values are assumed to be perfectly persistent over time. We analyze the first-price auction under three distinct disclosure regimes regarding the bid and award history. Of particular interest is the minimal disclosure regime, in which each bidder only learns privately whether he won or lost the auction at the end of each round. In equilibrium, the winner of the initial auction lowers his bids over time, while losers keep their bids constant, in anticipation of the winner's lower future bids. This equilibrium is efficient, and all information is eventually revealed. Importantly, this disclosure regime does not give rise to pooling equilibria. We contrast the minimal disclosure setting with the case in which all bids are public, and the case in which only the winner's bids are public. In these settings, an inefficient pooling equilibrium with low revenues always exists with a sufficiently large number of bidders.

Keywords: First price auction; Information revelation; Private bids; Repeated auctions (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2010-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Should Auctions be Transparent? (2017)
Working Paper: Should Auctions be Transparent? (2014)
Working Paper: Should Auctions Be Transparent? (2010)
Working Paper: Should Auctions be Transparent? (2010)
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