Reputational bidding

Speaker:  Miltiadis Makris - University of Leicester
  Monday, May 25, 2009 at 1:00 PM Palazzina 32 - ex Caserma Passalacqua

 

We consider auctions where bidders care about the reputational effects of their bidding

behavior since each bidder is in a sender-receiver signaling game where bids act as signals.

However, not all auctions - Dutch auctions being a simple example - allow for the disclosure of

all bids. Accordingly, we focus our analysis on alternative disclosure rules that capture most of

the standard possibilities. In this setting, we characterize symmetric and monotone equilibria

for standard auction formats, describe conditions for such equilibria to exist and show that

what matters for expected revenues is not the price mechanism but the type of information

about bids available after the auction. We then proceed to rank our disclosure rules according

to their ability to deliver efficient equilibria or, conditional on achieving the latter, the revenues

they imply. We find that these ranking can conflict in that a given disclosure rule can be

better than another in terms of guaranteeing efficiency but be worse in terms of expected

revenue to the seller. In particular, we find that under certain conditions, full disclosure of

bids may be bettered by less disclosure in terms of either efficiency or revenues. We also find

that first- and second-price sealed-bid auctions with disclosure of price are not equivalent. In

fact, these case be ranked depending on the type of reputational effects.

Documents
Title Format  (Language, Size, Publication date)
Paper  pdfpdf (it, 428 KB, 18/05/09)

Programme Director
Angelo Zago

Publication date
May 14, 2009

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