Hernando-Veciana, Angel; (2000) Essays on auction theory. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This Ph.D. Thesis consists of three contributed papers. In the first paper we study multiunit common value auctions with informed and less informed bidders. We show that bidders with less information can bid very aggressively and do surprisingly well in terms of probability of winning and expected revenue. We also show that the degree of aggressiveness and success of bidders with less information is positively related to the number of units for sale. We explain these phenomena in terms of the balance of the winner's curse and the loser's curse and their different effect on bidders with different quality of information. In the second paper we model a situation in which an auctioneer puts up for sale several identical units that have the property of common value for the bidders. One of the bidders, the incumbent, has better information about this common value, than the other bidders, the entrants. We show that in this situation an open ascending auction can give strictly higher expected utility to the entrants, and strictly higher expected revenue to the auctioneer. We provide an intuition for these results based on the different effect of the winner's curse on bidders that have different quality of information. In the last paper we analyse a multistage game of competition among auctioneers. In this game, auctioneers commit to some publicly announced reserve prices, in a first stage, and bidders choose to participate in one of the auctions, in a second stage. We show that the set of Nash equilibrium is non-empty. We also show that one property of the equilibrium set is that when the number of auctioneers and bidders tends to infinity, almost all auctioneers with production cost low enough to trade announce a reserve price equal to their production costs. Our paper confirms previous results for some "limit" versions of the model by McAfee (1993), Peters (1997), and Peters and Severinov (1997).

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