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Entry in First-Price Auctions with Signaling

Author

Listed:
  • Olivier Bos
  • Tom Truyts
Abstract
We study the optimal entry fee in a symmetric private value first-price auction with signaling, in which the participation decisions and the auction outcome are used by an outside observer to infer the bidders’ types. We show that this auction has a unique fully separating equilibrium bidding function. When the bidders’ sensibility for the signaling concern is sufficiently strong, the expected revenue maximizing entry fee is the maximal fee that guarantees full participation. The larger is the bidder's sensibility, the higher is the optimal participation.

Suggested Citation

  • Olivier Bos & Tom Truyts, 2022. "Entry in First-Price Auctions with Signaling," CESifo Working Paper Series 9900, CESifo.
    • Handle: RePEc:ces:ceswps:_9900
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    References listed on IDEAS

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    Cited by:

    1. Wang, Dazhong & Xu, Xinyi & Zeng, Xianjie, 2023. "Comparisons of standard royalty auctions with seller post-auction effort," Journal of Mathematical Economics, Elsevier, vol. 107(C).

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    More about this item

    Keywords

    first-price auction; entry; monotonic signalling; social status;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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