The Loser ' S Curse and Information Aggregation in Common Value Auctions

  title={The Loser ' S Curse and Information Aggregation in Common Value Auctions},
  author={Wolfgang Pesendorfer and Jeroen M. Swinkels},
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 ` co and nr kr… CONTINUE READING
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