Information Aggregation in Auctions with an Unknown Number of Bidders

32 Pages Posted: 16 Jul 2003

See all articles by Ron Harstad

Ron Harstad

University of Missouri

Saša Pekeč

Fuqua School of Business, Duke University

Ilia Tsetlin

Duke University - Fuqua School of Business

Date Written: May 2003

Abstract

Information aggregation, a key concern for uniform-price, common-value auctions with many bidders, has been characterized in models where bidders know exactly how many rivals they face. A model allowing for uncertainty over the number of bidders is essential for capturing a critical condition for information to aggregate: As the numbers of winning and losing bidders grow large, information aggregates if and only if uncertainty about the fraction of winning bidders vanishes. It is possible for the seller to impart this information by precommitting to a specified fraction of winning bidders, via a proportional selling policy. Intuitively, this makes the proportion of winners known, and thus provides all the information that bidders need to make winner's curse corrections.

Keywords: information aggregation, common-value auctions, uncertain level of competition

JEL Classification: D44, D82, C72

Suggested Citation

Harstad, Ronald M and Pekeč, Saša and Tsetlin, Ilia, Information Aggregation in Auctions with an Unknown Number of Bidders (May 2003). Available at SSRN: https://ssrn.com/abstract=408560 or http://dx.doi.org/10.2139/ssrn.408560

Ronald M Harstad (Contact Author)

University of Missouri ( email )

United States

HOME PAGE: http://harstad.missouri.edu

Saša Pekeč

Fuqua School of Business, Duke University ( email )

Ilia Tsetlin

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States