Sequential Common-Value Auctions with Asymmetrically Informed Bidders

Abstract

)We study an infinitely repeated first-price auction with common values. We focus on one-sidedincomplete information, in which one bidder learns the objects’ value, which itself does not change overtime. Learning by the uninformed bidder occurs only through observation of the bids. The proprietaryinformation is eventually revealed, and the seller extracts essentially the entire rent (for large discountfactors). Both players’ pay-offs tend to 0 as the discount factor tends to 1. However, the uninformed bidderdoes relatively better than the informed bidder. We discuss the case of two-sided incomplete informationand argue that, under a Markovian refinement, the outcome is pooling as information is revealed onlyinsofar as it does not affect prices.