Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229468
Authors: 
Bos, Olivier
Truyts, Tom
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8650
Abstract: 
We study a symmetric private value auction with signaling, in which the auction outcome is used by an outside observer to infer the bidders’ types. We elicit conditions under which an essentially unique D1 equilibrium bidding function exists in the second-price auction and the English auction. We establish there is no equivalence between these two auction designs, neither in bidding strategies nor in expected revenue. This is because the presence or absence of an increasing price clock, affects signaling incentives differently in both auction formats, and thereby also the bidders’ incentives to overbid their types. This leads to a strictly higher expected revenue in the second-price auction than in the English auction. Our analysis is completed by a comparison with other disclosure policies. Applications include art auctions and charity auctions.
Subjects: 
costly signalling
D1 criterion
social status
art auctions
charity auctions
JEL: 
D44
D82
Document Type: 
Working Paper

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