A simple model of expert and non-expert bidding in first-price auctions

Article Abstract:

A simple model which covers both independent private values and common value cases is analyzed to gain insights into equilibrium bidding behavior in a first-price sealed-bid auction wherein the number of informed bidders is not common knowledge. In equilibrium, experts and non-experts choose bids from distinct supports, with experts bidding in the upper and lower tail of the bidding spread and non-experts making random bids in between. In the case of common values, the revenue of the seller may decrease with an increase in the likelihood of expert participation.

Letting of contracts, Competitive bidding, Auctions

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Firm scale and the endogenous timing of entry: a choice between commitment and flexibility

Article Abstract:

A model of stochastic oligopoly with demand uncertainty, wherein firms choose entry timing internally, is introduced. Two classes of equilibria are identified: the asymmetric which corresponds to a Stackelberg equilibrium with a committed leader and a flexible follower and the symmetric which is a Cournot type equilibrium. The equilibrium correspondence that connects the two types of market structure is shown to be continuous. It is shown that both relative firm size and the amount of uncertainty are critical factors in choosing commitment or flexibility.

Uncertainty, Oligopolies

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