Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237348 
Year of Publication: 
2021
Series/Report no.: 
ECONtribute Discussion Paper No. 103
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
This paper analyzes a common-value, first-price auction with state-dependent participation. The number of bidders, which is unobservable to them, depends on the true value. For participation patterns with many bidders in each state, the bidding equilibrium may be of a "pooling" type - with high probability, the winning bid is the same across states and is below the ex-ante expected value - or of a "partially revealing" type with no significant atoms in the winning bid distribution and an expected winning bid increasing in the true value. Which of these forms will arise is determined by the likelihood ratio at the top of the signal distribution and the participation across states. We fully characterize this relation and show how the participation pattern determines the extent of information aggregation by the price.
Document Type: 
Working Paper

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