Auctions with Private Uncertainty and Resale Opportunities
Philip A. Haile
Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation
This paper studies auctions held before bidders are sure of the values they place on the object for sale, leaving potential gains to subsequent resale trade. While important insights from models of auctions without resale carry over, equilibrium bidding can be fundamentally altered by the endogeneity of valuations and the informational linkages between primary and secondary markets. As a result, models ignoring resale may often misguide policy and interpretation of bidding data. Furthermore, results regarding players' incentives to signal through their bids, the effects of resale on auction revenues, an d revenue comparisons between standard auctions depend on the structure of the secondary market.
Number of Pages in PDF File: 47
JEL Classification: D44, D89
Date posted: February 20, 1998