Chapter

Common Value

Flavio M. Menezes and Paulo K. Monteiro

in An Introduction to Auction Theory

Published in print November 2004 | ISBN: 9780199275984
Published online April 2005 | e-ISBN: 9780191602214 | DOI: http://dx.doi.org/10.1093/019927598X.003.0004
Common Value

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This chapter discusses common value auction models where the value of the object being sold is the same for all players, but is not known at the time of the auction. Two examples are presented to illustrate the effects of the common value assumption in bidding behaviour and on the seller’s expected revenue. The first assumes that individual signals about the true value of the object are independently determined. In second example, signals are correlated.

Keywords: common value auction; bidding behaviour; value; individual signals; seller; revenues

Chapter.  8790 words.  Illustrated.

Subjects: Microeconomics

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