Prices and the Winner's Curse.
We usually assume that increases in supply, allocation by rationing, and exclusion of potential buyers reduce prices. But all these activities raise the expected price in an important set of cases when common-value assets are sold. Furthermore, when we make the assumptions needed to rule out these &...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
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2002
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| _version_ | 1826300710541590528 |
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| author | Bulow, J Klemperer, P |
| author_facet | Bulow, J Klemperer, P |
| author_sort | Bulow, J |
| collection | OXFORD |
| description | We usually assume that increases in supply, allocation by rationing, and exclusion of potential buyers reduce prices. But all these activities raise the expected price in an important set of cases when common-value assets are sold. Furthermore, when we make the assumptions needed to rule out these "anomalies" for symmetric buyers, small asymmetries among the buyers necessarily cause the anomalies to reappear. Our results help explain rationing in initial public offerings and outcomes of spectrum auctions. We illustrate our results in the "Wallet Game" and in another new game we introduce, the "Maximum Game." |
| first_indexed | 2024-03-07T05:21:18Z |
| format | Journal article |
| id | oxford-uuid:df03efa8-4529-4459-9d82-77cee176d3d9 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T05:21:18Z |
| publishDate | 2002 |
| record_format | dspace |
| spelling | oxford-uuid:df03efa8-4529-4459-9d82-77cee176d3d92022-03-27T09:36:10ZPrices and the Winner's Curse.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:df03efa8-4529-4459-9d82-77cee176d3d9EnglishDepartment of Economics - ePrints2002Bulow, JKlemperer, PWe usually assume that increases in supply, allocation by rationing, and exclusion of potential buyers reduce prices. But all these activities raise the expected price in an important set of cases when common-value assets are sold. Furthermore, when we make the assumptions needed to rule out these "anomalies" for symmetric buyers, small asymmetries among the buyers necessarily cause the anomalies to reappear. Our results help explain rationing in initial public offerings and outcomes of spectrum auctions. We illustrate our results in the "Wallet Game" and in another new game we introduce, the "Maximum Game." |
| spellingShingle | Bulow, J Klemperer, P Prices and the Winner's Curse. |
| title | Prices and the Winner's Curse. |
| title_full | Prices and the Winner's Curse. |
| title_fullStr | Prices and the Winner's Curse. |
| title_full_unstemmed | Prices and the Winner's Curse. |
| title_short | Prices and the Winner's Curse. |
| title_sort | prices and the winner s curse |
| work_keys_str_mv | AT bulowj pricesandthewinnerscurse AT klempererp pricesandthewinnerscurse |