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Dominant strategies, superior information, and winner's curse in second-price auctions

Author

Listed:
  • Ori Haimanko

    (Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel)

  • Aner Sela

    (Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel)

  • Ram Orzach

    (Industrial Engineering and Management, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel Final version November 2001)

  • Ezra Einy

    (Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel)

Abstract

In a general model of common-value second-price auctions with differential information, we show equivalence between the following characteristics of a bidder: (i) having a dominant strategy; (ii) possessing superior information; (iii) being immune from winner's curse. When a dominant strategy exists, it is given by the conditional expectation of the common value with respect to bidder's information field; if the dominant strategy is used, other bidders cannot make a profit.

Suggested Citation

  • Ori Haimanko & Aner Sela & Ram Orzach & Ezra Einy, 2002. "Dominant strategies, superior information, and winner's curse in second-price auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 30(3), pages 405-419.
    • Handle: RePEc:spr:jogath:v:30:y:2002:i:3:p:405-419
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    Cited by:

    1. Einy, Ezra & Haimanko, Ori & Orzach, Ram & Sela, Aner, 2002. "Dominance solvability of second-price auctions with differential information," Journal of Mathematical Economics, Elsevier, vol. 37(3), pages 247-258, May.
    2. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, vol. 44(2), pages 272-285, August.
    3. Javier Castro & Rosa Espínola & Inmaculada Gutiérrez & Daniel Gómez, 2023. "Auctions: A New Method for Selling Objects with Bimodal Density Functions," Computational Economics, Springer;Society for Computational Economics, vol. 61(4), pages 1707-1743, April.

    More about this item

    Keywords

    common-value second-price auctions · differential information · dominant strategies · information superiority · winner's curse.;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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