Entry in First-Price Auctions with Signaling
KU Leuven, Department of Economics Discussion Paper Series, DPS16.05
16 Pages Posted: 28 Apr 2016
Date Written: April 2016
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: Suggested Citation