The Complete Information First. Price Auction or the Importance of Being Indivisible

@inproceedings{Alcalde2008TheCI,
  title={The Complete Information First. Price Auction or the Importance of Being Indivisible},
  author={Jos{\'e} Alcalde and Matthias Dahm},
  year={2008}
}
Despite the popularity of auction theoretical thinking, it appears that no one has presented an elementary equilibrium analysis of the …rst-price sealed-bid auction mechanism under complete information. This paper aims to remedy that omission. We show that the existence of pure strategy undominated Nash equilibria requires that the bidding space is not “too divisible”(that is, a continuum). In fact, when bids must form part of a …nite grid there always exists a “high price equilibrium”. However… CONTINUE READING

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