Template-Type: ReDIF-Paper 1.0
Title: A Common-Value Auction With State-Dependent Participation
Author-Name: Stephan Lauermann
Author-Email:  s.lauermann@uni-bonn.de
Author-Name: Asher Wolinsky
Author-Email:  a-wolinsky@northwestern.edu
Classification-JEL: C78, D83
Keywords: Search, Auctions, Adverse Selection 

Abstract: This paper analyzes a common-value, First-price auction with state-dependent
participation. The number of bidders, which is unobservable to them,
depends on the true value. For exogenously given participation patterns
that involve many bidders in each state, the bidding equilibrium may be
of a pooling type with high probability, the winning bid is the same
across states and is below the ex-ante expected value or of a partially
revealing type with no significant atoms in the winning bid distribu-
tion and an expected winning bid increasing in the true value. Which
of these forms will arise is determined by the likelihood ratio at the top
of the signal distribution and the participation across states. When the
state-dependent participation is endogenized as the strategic solicitation
by an informed seller who bears a small cost for each solicited bidder,
an equilibrium of the partially revealing type always exists and is unique
of this type; for certain signal distributions there also exist equilibria of
the pooling type.



Note: 
Length: 67
Creation-Date: 2020-12
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp063
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2018_063v2