Competitive Bidding in Auctions with Private and Common Values

16 Pages Posted: 13 Jul 2003

See all articles by Jacob K. Goeree

Jacob K. Goeree

University of Virginia - Department of Economics

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE)

Abstract

The objects for sale in most auctions possess both private and common value elements. This salient feature has not yet been incorporated into a strategic analysis of equilibrium bidding behaviour. This paper reports such an analysis for a stylised model in which bidders receive a private value signal and an independent common value signal. We show that more uncertainty about the common value has a negative effect on efficiency. Information provided by the seller decreases uncertainty, which raises efficiency and seller's revenues. Efficiency and revenues are also higher when more bidders enter the auction.

Suggested Citation

Goeree, Jacob and Offerman, Theo, Competitive Bidding in Auctions with Private and Common Values. Available at SSRN: https://ssrn.com/abstract=423324

Jacob Goeree (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
114 Rouss Hall
Charlottesville, VA 22904-4182
United States
804-924-7649 (Phone)

Theo Offerman

University of Amsterdam - Faculty of Economics & Econometrics (FEE) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4294 (Phone)
+31 20 525 5283 (Fax)

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