Common Value Auctions with Asymmetric Bidder Information

Download or read book Common Value Auctions with Asymmetric Bidder Information written by Priyodorshi Banerjee and published by . This book was released on 2008 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study common value auctions with two asymmetrically informed bidders using a simple binary model. A unique, generically asymmetric, mixed-strategy equilibrium exists for the first-price auction. Bidders get positive payoffs, with a superiorly informed bidder getting a higher payoff. One of the bidders submits a higher bid than the other on average: aggressive bidding is not necessarily associated with inferiority of information. A continuum of pure-strategy equilibria exist for the second-price auction. If bidders play the unique symmetric equilibrium strategies, second-price auctions are generically revenue-dominant. A change in the degree of asymmetry in general has an ambiguous effect on revenue.