Asymmetric common-value auctions with applications to private-value auctions with resale

2009 ◽  
Vol 45 (1-2) ◽  
pp. 253-290 ◽  
Author(s):  
Harrison H. Cheng ◽  
Guofu Tan
Keyword(s):  
Common Value ◽  
Common Value Auctions ◽  
Private Value Auctions ◽  
Private Value

Reference-Dependent Preferences and Overbidding in Private and Common Value Auctions

2020 ◽  
Vol 9 (2) ◽  
pp. 20-37
Author(s):  
Mariano Gabriel Runco
Keyword(s):  
Information Criterion ◽  
Experimental Auctions ◽  
Bidding Strategies ◽  
Common Value ◽  
Common Value Auctions ◽  
Equilibrium Bidding ◽  
Private Value ◽  
Standard Risk ◽  
Better Than ◽  
Reference Dependent Preferences

This paper proposes a model of reference dependent preferences to explain overbidding in private and common value auctions. It is assumed that the reference point is proportional to the value of the object and that losses are weighed more heavily than gains in the utility function. Equilibrium bidding strategies are derived for first- and second-price private and common value auctions. I find that this model fits the data of all experiments analyzed, both private and common value, better in terms of the Bayesian Information Criterion than a standard risk neutral model; moreover, it explains overbidding in all private value and some common value auctions better than other alternative models. These results suggest that reference dependence, among other factors, might play a role in the widespread tendency of subjects to overbid in most experimental auctions.

scholarly journals Estratégias dos licitantes nos leilões do Tesouro Nacional

2003 ◽  
Vol 1 (1) ◽  
pp. 113
Author(s):  
Anderson Caputo Silva
Keyword(s):  
Empirical Work ◽  
Bidding Behavior ◽  
Previous Evidence ◽  
Treasury Auctions ◽  
Treasury Securities ◽  
Common Value ◽  
Level Data ◽  
Theoretical Predictions ◽  
Private Value Auctions ◽  
Private Value

Most empirical work in treasury auctions use aggregate auction results to examine bidding behavior. We investigate the strategies of bidders in Brazilian treasury auctions using both aggregate and bidder level data and find that more detailed information allows great improvements in the understanding of bidding behavior in treasury auctions. Classifying bidders according to characteristics regarding their institutional category and their nationality, we find evidence of distinct bidding behavior across types of bidders. Moreover, in line with previous evidence in auctions of Japanese government securities, we find that foreign bidders seem to obtain higher profits than those of national institutions. These results suggest that caution should be exercised in the interpretation of testes of bidding behavior that do not take differences in bidder’s characteristics into account and (or) that assume that treasury securities are pure common-value goods. We find that Brazilian auctions are relatively illiquid as higher competition yields lower bidders’ discounts. Contrary to theoretical predictions of both common- and private-value auctions, we also find that bidders obtain lower profits in auctions with higher dispersion in bidders’ valuations.

Information Aggregation in Common Value Auctions

Econometrica ◽  
2002 ◽  
Vol 70 (4) ◽  
pp. 1675-1682 ◽  
Author(s):  
Ilan Kremer
Keyword(s):  
Information Aggregation ◽  
Common Value ◽  
Common Value Auctions

scholarly journals Single object auctions with interdependent values

2011 ◽  
Vol 56 (188) ◽  
pp. 125-169
Author(s):  
Dejan Trifunovic
Keyword(s):  
Single Object ◽  
English Auction ◽  
Common Value ◽  
Reserve Prices ◽  
Interdependent Values ◽  
Common Value Auctions ◽  
Expected Revenue

This paper reviews single object auctions when bidders? values of the object are interdependent. We will see how the auction forms could be ranked in terms of expected revenue when signals that bidders have about the value of the object are affiliated. In the discussion that follows we will deal with reserve prices and entry fees. Furthermore we will examine the conditions that have to be met for English auction with asymmetric bidders to allocate the object efficiently. Finally, common value auctions will be considered when all bidders have the same value for the object.

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