Abstract
We consider the sale of an object by sealed-bid auction, when one bidder has private information and the others have access only to public information. The equilibria of the bidding game are determined, and it is shown that at equilibrium the informed bidder's distribution of bids is the same as the distribution of the maximum of the others' bids. The expected profit of the informed bidder is generally positive, while the other bidders have zero expected profits. The equilibrium bid distributions and the bidders' expected profits are shown to vary continuously in the parameters of the bidding game.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 161-169 |
| Number of pages | 9 |
| Journal | Journal of Mathematical Economics |
| Volume | 11 |
| Issue number | 2 |
| DOIs | |
| State | Published - Apr 1983 |
Funding
*Professor Engelbrecht-Wiggans’ work was begun at the Cowles Foundation at Yale University and was supported by the U.S. Office of Naval Research and National Science Foundation grant SOC-78-25219. Professor Milgrom’s research was supported by National Science Foundation grant SES-80-01932 and by the Center for Advanced Research in Managerial Economics at Northwestern University. Professor Weber’s work was begun at the Cowles Foundation at Yale University and was supported by the U.S. Offtce of Naval Research, the Xerox Corporation, and the Center for Advanced Research in Managerial Economics at Northwestern University.
ASJC Scopus subject areas
- Economics and Econometrics
- Applied Mathematics