A communication equilibrium in English auctions with discrete bidding

Ricardo Gonçalves

No 42008, Working Papers de Economia (Economics Working Papers) from Católica Porto Business School, Universidade Católica Portuguesa

Abstract: This paper analyses a model of a common value English auction with discrete bidding. In this model, we show that there exists a communication equilibrium in which the high signal bidder strategically chooses his first bid so as to maximise his expected utility. Straightforward bidding, or increasing the bid by the minimum amount possible, is the equilibrium strategy for both bidders in all other auction rounds. We relate this result to recent research on English auctions with discrete bidding and auctions where bidders may have noisy information about their opponent's signals.

Keywords: English Auctions; discrete bidding; communication equilibrium (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2008-06
New Economics Papers: this item is included in nep-cta, nep-gth, nep-mkt and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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