Entry in First-Price Auctions with Signaling

KU Leuven, Department of Economics Discussion Paper Series, DPS16.05

16 Pages Posted: 28 Apr 2016

See all articles by Olivier Bos

Olivier Bos

Université Paris II - Panthéon-Assas

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB); Facultés Universitaires Saint Louis à Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: April 2016

Abstract

We study the optimal entry fee in a symmetric private value first-price auction with signaling, in which the participation decisions and the auction outcome are used by an outside observer to infer the bidders' types. We show that this auction has a unique fully separating equilibrium bidding function. The expected revenue maximizing entry fee is the maximal fee that guarantees full participation.

Keywords: Monotonic signaling; social status; first-price auction; entry

JEL Classification: D44, D82

Suggested Citation

Bos, Olivier and Truyts, Tom, Entry in First-Price Auctions with Signaling (April 2016). KU Leuven, Department of Economics Discussion Paper Series, DPS16.05, Available at SSRN: https://ssrn.com/abstract=2771610 or http://dx.doi.org/10.2139/ssrn.2771610

Olivier Bos (Contact Author)

Université Paris II - Panthéon-Assas ( email )

12 place du Pantheon
Paris cedex 06, 75231
France

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Facultés Universitaires Saint Louis à Bruxelles ( email )

Boulevard du Jardin Botanique 43
Bruxelles, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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