Prices and the Winner's Curse

Nuffield College, Department of Economics Working Paper No. 1998-W2

33 Pages Posted: 9 May 1999

See all articles by Paul Klemperer

Paul Klemperer

University of Oxford - Department of Economics; Centre for Economic Policy Research (CEPR)

Jeremy Bulow

Stanford University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: April 1999

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.

Note: Previously entitled "The Winner's Curse and the Failure of the Law of Demand".

JEL Classification: D44, L96, G30, G24

Suggested Citation

Klemperer, Paul and Bulow, Jeremy I., Prices and the Winner's Curse (April 1999). Nuffield College, Department of Economics Working Paper No. 1998-W2. Available at SSRN: https://ssrn.com/abstract=162908 or http://dx.doi.org/10.2139/ssrn.162908

Paul Klemperer (Contact Author)

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Jeremy I. Bulow

Stanford University ( email )

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