Review of Economic Studies Vol. 74 No. 1 2007
Costly Signalling in Auctions
Abstract
This paper analyses a dynamic auction in which a fraction of each bid is sunk. Jump bidding is used by bidders to signal their private information. Bluffing (respectively sandbagging) occurs when a weak (respectively strong) player seeks to deceive his opponent into thinking that he is strong (respectively weak). A player with a moderate valuation bluffs by making a high bid and drops out if his bluff is called. A player with a high valuation should vary his bids and should sometimes sandbag by bidding low, to induce lower bids by his rival.
- DOI
- 10.1111/j.1467-937x.2007.00418.x
- Volume
- 74
- Issue
- 1
- Pages
- 173-206
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref