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Information feedback in first price auctions
Author(s) -
Esponda Ignacio
Publication year - 2008
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/j.0741-6261.2008.00024.x
Subject(s) - common value auction , bidding , microeconomics , nash equilibrium , economics , interdependence , private information retrieval , vickrey auction , revenue , contrast (vision) , unique bid auction , symmetric equilibrium , vickrey–clarke–groves auction , revenue equivalence , empirical research , mathematical economics , auction theory , game theory , equilibrium selection , computer science , repeated game , mathematics , finance , computer security , artificial intelligence , political science , law , statistics
I apply the notion of a self‐confirming equilibrium (SCE) to study how feedback in first price auctions influences bidders' perceptions about their strategic environment, and consequently their bidding behavior. In a private values setting, revealing the two highest bids at the end of each auction is sufficient for bidders to have correct beliefs (justifying the assumption of Nash equilibrium). In contrast, in every symmetric SCE of a symmetric, affiliated, private values model, bidding strategies and revenue are (weakly) higher if only the highest bid is revealed. I also consider interdependent valuations and discuss implications for the empirical auction literature.