Abstract
We examine self-enforcing bidder coordination in auctions in which bidding is costly. Conditions on the distribution of valuations are identified that guarantee multiple equilibria. Under slightly stronger conditions, within the set of “sunspot” payoffs only those that are convex combinations of payoffs of extreme asymmetric equilibria are interim efficient for the bidders. If preplay communication is possible, every no-communication equilibrium payoff is interim Pareto-dominated for the bidders by some cheap-talk equilibrium payoff. When the number of auctions is large, communication equilibria exist that yield ex-post efficient payoffs for the bidders almost surely.Journal of Economic LiteratureClassification Numbers: D44, D82.
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