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Hiding Information in Open Auctions

Author

Listed:
  • David Ettinger

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Fabio Michelucci

    (CERGE-EI - UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic])

Abstract

We analyze the rationale for hiding information in open auction formats. In particular, we focus on the incentives for a bidder to call a price higher than the highest standing one in order to prevent the remaining active bidders from aggregating more accurate information that could be gathered by observing the exact drop out values of the exiting bidders. Necessary conditions for the existence of jump bids with such motivations are provided. Finally, we show that there is no clear-cut effect of jump bids on efficiency and expected revenue and introduce several specific results.

Suggested Citation

  • David Ettinger & Fabio Michelucci, 2014. "Hiding Information in Open Auctions," Post-Print hal-01458368, HAL.
    • Handle: RePEc:hal:journl:hal-01458368
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    References listed on IDEAS

    as
    1. Bernhardt, Dan & Scoones, David, 1993. "Promotion, Turnover, and Preemptive Wage Offers," American Economic Review, American Economic Association, vol. 83(4), pages 771-791, September.
    2. Michael J. Fishman, 1988. "A Theory of Preemptive Takeover Bidding," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 88-101, Spring.
    3. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 431-495, September.
    4. Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 185-210.
    5. Hirshleifer, David, 1989. "Facilitation of Competing Bids and the Price of a Takeover Target," University of California at Los Angeles, Anderson Graduate School of Management qt2496649g, Anderson Graduate School of Management, UCLA.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. David Ettinger & Fabio Michelucci, 2016. "Creating a winner’s curse via jump bids," Review of Economic Design, Springer;Society for Economic Design, vol. 20(3), pages 173-186, September.
    2. Hungria Gunnelin, Rosane, 2020. "Bidding strategies and winner’s curse in auctions of non-distressed residential real estate," Working Paper Series 20/13, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    3. repec:dau:papers:123456789/15048 is not listed on IDEAS
    4. David Ettinger & Fabio Michelucci, 2016. "Hiding Information in Open Auctions with Jump Bids," Economic Journal, Royal Economic Society, vol. 126(594), pages 1484-1502, August.
    5. Gonçalves, Ricardo & Ray, Indrajit, 2017. "Partition Equilibria in a Japanese-English Auction with Discrete Bid Levels for the Wallet Game," CRETA Online Discussion Paper Series 34, Centre for Research in Economic Theory and its Applications CRETA.
    6. Dodonova, Anna & Khoroshilov, Yuri, 2020. "Preemptive bidding in common value takeover auctions: Social surplus and the target’s revenue," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).

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    More about this item

    Keywords

    Auctions; Efficiency; Jump Bids;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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