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) | ||||||
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| 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 | ||||||
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| 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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