Bidding among Friends and Enemies with Symmetric InformationReport as inadecuate

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1 LEDa - Laboratoire d-Economie de Dauphine 2 CEREMADE - CEntre de REcherches en MAthématiques de la DEcision

Abstract : We consider an auction setting, in a symmetric information framework, in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We prove that the outcome of the first- price auction is not aff ected by identity independent price externalities while the outcome of the second-price auction is. In contrast, identity dependent price externalities a ect the outcome of both auction formats. In any case, the second-price auction exacerbates the eff ects of price externalities.

Keywords : auctions symmetric information externalities toeholds budget-constraints

Author: David Ettinger -



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