International Journal of Game Theory

, Volume 30, Issue 3, pp 405–419

Dominant strategies, superior information, and winner's curse in second-price auctions

Authors

  • Ezra Einy
    • Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel (e-mail: einy@bgumail.bgu.ac.il, orih@bgumail.bgu.ac.il, anersela@bgumail.bgu.ac.il)
  • Ori Haimanko
    • Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel (e-mail: einy@bgumail.bgu.ac.il, orih@bgumail.bgu.ac.il, anersela@bgumail.bgu.ac.il)
  • Ram Orzach
    • Industrial Engineering and Management, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel (e-mail: orzach@bgumail.bgu.ac.il)
  • Aner Sela
    • Economics Department, Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel (e-mail: einy@bgumail.bgu.ac.il, orih@bgumail.bgu.ac.il, anersela@bgumail.bgu.ac.il)

DOI: 10.1007/s001820100087

Cite this article as:
Einy, E., Haimanko, O., Orzach, R. et al. Game Theory (2002) 30: 405. doi:10.1007/s001820100087

Abstract.

In a general model of common-value second-price auctions with differential information, we show equivalence between the following characteristics of a bidder: (i) having a dominant strategy; (ii) possessing superior information; (iii) being immune from winner's curse. When a dominant strategy exists, it is given by the conditional expectation of the common value with respect to bidder's information field; if the dominant strategy is used, other bidders cannot make a profit.

JEL Classification: C72D44D82.
Key words: common-value second-price auctionsdifferential informationdominant strategiesinformation superioritywinner's curse.
Download to read the full article text

Copyright information

© Springer-Verlag Berlin Heidelberg 2002