An Asymmetric Common-Value Auction Model

1987 ◽  
Vol 18 (4) ◽  
pp. 611 ◽  
Author(s):  
Donald B. Hausch
Keyword(s):  
Common Value ◽  
Common Value Auction ◽  
Auction Model

Anomalies: The Winner's Curse

1988 ◽  
Vol 2 (1) ◽  
pp. 191-202 ◽  
Author(s):  
Richard H Thaler
Keyword(s):  
Field Studies ◽  
Risk Averse ◽  
Common Phenomenon ◽  
Winner's Curse ◽  
Winner’S Curse ◽  
Empirical Question ◽  
Common Value ◽  
Winning Bidder ◽  
Common Value Auction ◽  
Very High

Next time that you find yourself a little short of cash for lunch, try the following experiment in your class. Take a jar and fill it with coins, noting the total value of the coins. Now auction off the jar to your class (offering to pay the winning bidder in bills to control for penny aversion). Chances are very high that the following results will be obtained: (1) the average bid will be significantly less than the value of the coins (bidders are risk averse); (2) the winning bid will exceed the value of the jar. Therefore, you will have money for lunch, and your students will have learned first-hand about the “winner's curse.” The winner's curse cannot occur if all the bidders are rational, so evidence of a winner's curse in market settings would constitute an anomaly. However, acting rationally in a common value auction can be difficult. Solving for the optimal bid is not trivial. Thus, it is an empirical question whether bidders in various contexts get it right or are cursed. I will present some evidence, both from experimental and field studies, suggesting that the winner's curse may be a common phenomenon.

Implications of a Reserve Price in an Agent-Based Common-Value Auction

2013 ◽  
Vol 43 (1) ◽  
pp. 33-51 ◽  
Author(s):  
Christopher N. Boyer ◽  
B. Wade Brorsen
Keyword(s):  
Reserve Price ◽  
Agent Based ◽  
Common Value ◽  
Common Value Auction

A Dichotomy of Sport Sponsorships: Does the Nature of Competition Among Sponsors Matter?

2021 ◽  
pp. 1-11
Author(s):  
Thomas W. Doellman ◽  
Brian R. Walkup ◽  
Adrien Bouchet ◽  
Brian R. Chabowski
Keyword(s):  
Firm Value ◽  
Competitive Environment ◽  
Future Research ◽  
Professional Football ◽  
Common Value ◽  
Common Value Auctions ◽  
Different Types ◽  
Prior Literature ◽  
Common Value Auction ◽  
Bidding Process

In this paper, the authors argue that the firm value implications of sport sponsorships for sponsors may depend on the competitive environment during the bidding process for different types of sponsorships. More specifically, the authors contend that the bidding environment for professional football (soccer) kit sponsorships represents a form of common value auction, while the bidding environment for corporate logo sponsorships on teams’ shirts does not. As common value auctions are prone to winner’s curse, the firm value implications should be different for kit sponsorship announcements than for shirt sponsorship announcements. Our results suggest that shareholders indeed perceive the value derived from kit and shirt sponsorships differently, resulting in the predicted distinction in their impact on sponsors’ firm value. This study sheds light on conflicting results on firm value implications of sport sponsorships in the prior literature and provides rich areas for future research.

Extracting the Surplus in the Common-Value Auction

Econometrica ◽  
1989 ◽  
Vol 57 (6) ◽  
pp. 1451 ◽  
Author(s):  
R. Preston McAfee ◽  
John McMillan ◽  
Philip J. Reny
Keyword(s):  
Common Value ◽  
The Common ◽  
Common Value Auction

Underpricing in Discriminatory and Uniform-Price Treasury Auctions

2007 ◽  
Vol 42 (2) ◽  
pp. 443-466 ◽  
Author(s):  
David Goldreich
Keyword(s):  
Secondary Market ◽  
Summary Statistics ◽  
Average Price ◽  
Uniform Price ◽  
Treasury Auctions ◽  
Common Value ◽  
Auction Models ◽  
Auction Mechanisms ◽  
Common Value Auction

AbstractThis paper compares the newer uniform-price U.S. Treasury auctions to the traditional discriminatory mechanism and examines the extent to which the auction mechanisms are responsible for underpricing. Empirically, I find that even for the newer uniform-price auctions, the average price received by the Treasury is less than the price of the same securities in the concurrent secondary market although this underpricing is reduced by half relative to the older mechanism. From the summary statistics released by the Treasury, I calibrate common value auction models for the two mechanisms and predict the level of underpricing in each auction. I find that the observed magnitude of underpricing in the auctions is consistent with the model's predictions.

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