The loser's curse and information aggregation in common value auctions

Wolfgang Pesendorfer, Jeroen M. Swinkels

Research output: Contribution to journalArticlepeer-review

100 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)1247-1281
Number of pages35
Issue number6
StatePublished - Nov 1997

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • Common value auctions
  • Information aggregation


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