International Journal of Game Theory

, Volume 24, Issue 3, pp 293–319

Comparative static effects of number of bidders and public information on behavior in second-price common value auctions

  • John H. Kagel
  • Dan Levin
  • Ronald M. Harstad
Games and Experiments

DOI: 10.1007/BF01243157

Cite this article as:
Kagel, J.H., Levin, D. & Harstad, R.M. Int J Game Theory (1995) 24: 293. doi:10.1007/BF01243157


Comparative static tests of Nash bidding theory in second-price common value auctions show that bidders fail to respond in the right direction to more rivals and to public information concerning the value of the item. The former provides a clear indication that bidders fail to appreciate the adverse selection forces inherent in common value auctions, while the latter shows that policy prescriptions can fail given out-of-equilibrium behavior. These tests of Nash bidding theory apply to a far wider variety of circumstances than in first-price auctions, so there is less scope to rationalize the failure of the theory.

Key words

auctions common value information laboratory experiments 

Copyright information

© Physica-Verlag 1995

Authors and Affiliations

  • John H. Kagel
    • 1
  • Dan Levin
    • 2
  • Ronald M. Harstad
    • 3
  1. 1.Department of EconomicsUniversity of PittsburghPittsburghUSA
  2. 2.Department of EconomicsUniversity of HoustonUSA
  3. 3.Faculty of Management and RUTCORRutgers UniversityUSA

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