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On the Informational Inefficiency of Discriminatory Price Auctions

Jackson, Matthew O. and Kremer, Ilan (2004) On the Informational Inefficiency of Discriminatory Price Auctions. Social Science Working Paper, 1191. California Institute of Technology , Pasadena, CA. https://resolver.caltech.edu/CaltechAUTHORS:20170731-144544163

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Abstract

We analyze bidding behavior in large discriminatory price auctions where the number of objects is a non-trivial proportion of the number of bidders. Bidders observe private signals that are affiliated with the common value. We show that the average price in the auction is biased downward from the expected value of the objects, even in the competitive limit. In particular, we show that conditional on relatively low signals, bidders bid the expected value of the objects conditional on their information and winning; while bids at higher signals flatten out and are below the expected value conditional on winning.


Item Type:Report or Paper (Working Paper)
Related URLs:
URLURL TypeDescription
http://resolver.caltech.edu/CaltechAUTHORS:20171103-151716456Related ItemLater version published in Journal of Economic Theory
ORCID:
AuthorORCID
Jackson, Matthew O.0000-0001-9846-4249
Additional Information:We are grateful for financial support from the National Science Foundation under grant SES-9986190. Published as Jackson, M.O., & Kremer, I. (2007). On the informational inefficiency of discriminatory price auctions. Journal of Economic Theory, 132(1), 507-517.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
NSFSES-9986190
Subject Keywords:Auction, Competition, Discriminatory Auction, Asymptotic Efficiency, Efficient Markets, Efficient Market Hypothesis
Series Name:Social Science Working Paper
Issue or Number:1191
Classification Code:JEL: D44, C72, D41, G14
Record Number:CaltechAUTHORS:20170731-144544163
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170731-144544163
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79618
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:01 Aug 2017 23:02
Last Modified:03 Oct 2019 18:22

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