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On Bid Disclosure in OCS Wildcat Auctions

Author

Listed:
  • Nicolas Melissas

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

Abstract
I study a game in which two players first bid for offshore tracts (below which oil and gas may be present) and next time their drilling decisions. High types bid more aggressively if the auctioneer discloses bids as this gives them useful information about the profitability of drilling. A low type fears that the disclosure of her "low" bid reduces the other player's incentive to drill. Hence, they bid more aggressively if the auctioneer does not disclose bids. If players are sufficiently patient, it is optimal to disclose bids. Otherwise, it may be optimal not to disclose them.

Suggested Citation

  • Nicolas Melissas, 2009. "On Bid Disclosure in OCS Wildcat Auctions," Working Papers 0905, Centro de Investigacion Economica, ITAM.
    • Handle: RePEc:cie:wpaper:0905
    as

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    File URL: http://ftp.itam.mx/pub/academico/inves/melissas/09-05.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Information Externality; Oil Exploration; Waiting; War of attrition;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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