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Goeree, J. and Offerman, T. (2003a). Competitive bidding in auctions with private and common values. Economic Journal, 113:598-614.


  • Journal
    Economic Journal

The objects for sale in most auctions possess both private and common value elements. This salient feature has not yet been incorporated into a strategic analysis of equilibrium bidding behaviour. This paper reports such an analysis for a stylised model in which bidders receive a private value signal and an independent common value signal. We show that more uncertainty about the common value has a negative effect on efficiency. Information provided by the seller decreases uncertainty, which raises efficiency and seller s revenues. Efficiency and revenues are also higher when more bidders enter the auction.