First Price Auctions with General Information Structures: Implications for Bidding and Revenue

Dirk Bergemann, Benjamin Brooks and Stephen Morris

No 2018R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We explore the impact of private information in sealed bid first price auctions. For a given symmetric and arbitrarily correlated prior distribution over values, we characterize the lowest winning bid distribution that can arise across all information structures and equilibria. The information and equilibrium attaining this minimum leave bidders uncertain whether they will win or lose and indifferent between their equilibrium bids and all higher bids. Our results provide lower bounds for bids and revenue with asymmetric distributions over values. We report further analytic and computational characterizations of revenue and bidder surplus including upper bounds on revenue. Our work has implications for the identification of value distributions from winning bid data and for the informationally robust comparison of alternative bidding mechanisms.

Keywords: First price auction; Information structure; Bayes correlated equilibrium; Private values; Interdependent values; Common values; Revenue; Surplus; Welfare bounds; Reserve price (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 D83 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2015-08, Revised 2015-11
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: First‐Price Auctions With General Information Structures: Implications for Bidding and Revenue (2017)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2017)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2016)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2016)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2015)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2015)
Working Paper: First Price Auctions with General Information Structures: Implications for Bidding and Revenue (2015)
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