A Communication Equilibrium in English Auctions with Discrete Bidding

Gonçalves, Ricardo

http://hdl.handle.net/10400.14/25291

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Authors

Gonçalves, Ricardo

Abstract(s)

This paper analyses a model of a common value English auction with discrete bidding. In this model, we show that there exists a communication equilibrium in which the high signal bidder strategically chooses his rst bid so as to maximise his expected utility. Straightforward bidding, or increasing the bid by the minimum amount possible, is the equilibrium strategy for both bidders in all other auction rounds. We relate this result to recent research on English auctions with discrete bidding and auctions where bidders may have noisy information about their opponent s signals.