Bidding against an unknown number of competitiors sharing affiliated information

Jan Vleugels ()
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Jan Vleugels: University Mannheim, Postal: Building A5, Postbox 103 462, D-68131 Mannheim, Germany

No 97-13, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: In the general symmetric model of Milgrom and Weber, equilibrium bidding is analyzed with a stochastic number of bidders. the equilibrium strategies generalize the known expressions in a coherent way. For the equilibrium bid function of the first price auction, an interpretation involving 'marginal winning probabilities' is proposed. With ageneralized version of the linkage principle, the well-knownrevenue ranking theorems extend to a stochastic number of bidders. As an application, we show that the seller's generically optimal information policy regarding the number of competitors is concealing the information.

Pages: 44 pages
Date: 1997-07-09
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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