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Prices and the Winner's Curse

Jeremy Bulow and Paul Klemperer ()
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Jeremy Bulow: Federal Trade Commission & Graduate School of Business, Stanford University, USA

Game Theory and Information from University Library of Munich, Germany

Abstract: We usually assume increases in supply, allocation by rationing, and exclusion of potential buyers will never raise prices. But all of these activities raise the expected price in an important set of cases when common-value assets are sold. Furthermore, when we make the assumptions needed to rule out these "anomalies" when buyers are symmetric, small asymmetries among the buyers necessarily cause the anomalies to reappear.

Keywords: Auction theory; common value; winner's curse; PCS auction; spectrum auction; airwaves auction; initial public offerings; IPO (search for similar items in EconPapers)
JEL-codes: D44 L96 G30 G24 (search for similar items in EconPapers)
Date: 1999-04-16
Note: Type of Document - Tex/pdf; prepared on PC; to print on HP/PostScript; pages: 33 ; figures: none. We never published this piece and now we would like to reduce our mailing and xerox cost by posting it.
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Related works:
Journal Article: Prices and the Winner's Curse (2002)
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