, Volume 30, Issue 3, pp 405-419

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

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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.

Final version November 2001