DP5845 | Learning in Sequential Auctions when Bidders May Acquire Multiple Objects

Publication Date

23/09/2006

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Abstract

We consider sequential auctions in which bidders are allowed to acquire multiple objects. Learning is an important aspect in these auctions as bidders, who are unaware of their opponents? type, learn about them. Each bidder has an incentive to deceive her opponents from learning about her true type, the deception effect. Hence, the deception effect accounts only for the bidder?s action to affect the opponents? beliefs about her type. In contrast, the extraction effect accounts for the bidder?s action to lower her bid in order to extract information about her opponents? types. We show that the extraction effect lowers the auctioneer?s revenue more (less) than the deception effect when the probability of having a high-value opponent is low (high).