We consider an auction in which k identical objects of unknown value are auctioned off to n bidders The k highest bidders get an object and pay the k + 1st bid. Bidders receive a signal that provides information about the value of the object. We characterize the unique symmetric equilibrium of this auction. We then consider a sequence of auctions Ar with nr bidders and kr objects. We show that price converges in probability to the true value of the object if and only if both kr → ∞ and nr - kr → ∞, i.e., both the number of objects and the number of bidders who do not receive an object go to infinity.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
- Common value auctions
- Information aggregation