Bidding in a Possibly Common-Value Auction

Abstract

We analyze a second-price auction with two bidders in which only one of the bidders is informed as to whether the object is valued commonly. We show that any equilibrium strategy of the bidder who is uninformed must be part of an equilibrium when both bidders instead know that the auction is not common value, regardless of the way in which the values are different. We derive su¢ cient conditions for equilibrium existence.

JEL codes

Reference

Yuk-fai Fong, and Daniel F. Garrett, “Bidding in a Possibly Common-Value Auction”, Games and Economic Behavior, vol. 70, n. 2, November 2010, pp. 494–501.