Creating a winner's curse via jump bids

David Ettinger () and Fabio Michelucci
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David Ettinger: LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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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: jump bids; auctions; efficiency (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-des and nep-mic
Note: View the original document on HAL open archive server: https://hal.science/hal-01432861v1
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Published in Review of Economic Design, 2016, 20 (3), pp.173-186. ⟨10.1007/s10058-016-0187-z⟩

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Related works:
Journal Article: Creating a winner’s curse via jump bids (2016)
Working Paper: Creating a Winner's Curse via Jump Bids (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01432861

DOI: 10.1007/s10058-016-0187-z

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