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| Toshihiro Tsuchihashi |
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| ''Mission impossible: Buy price fails to signal information'' |
| ( 2019, Vol. 39 No.1 ) |
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| According to the well-known linkage principle, a seller benefits from revealing information relevant to bidders' payoffs in auctions. For this purpose, the seller needs a signaling device to credibly transmit her private information to bidders. One natural candidate for such a device is a buy price. In this paper, I investigate the theoretical possibility that the buy price may credibly signal the seller's private information in second-price auctions. However, I find that the buy price cannot serve as a signaling device. There exists no separating equilibrium such that a buy price signals the seller's private information. |
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| Keywords: buy price; signaling; second price auction |
JEL: D8 - Information, Knowledge, and Uncertainty: General
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| Manuscript Received : Jan 28 2019 | | Manuscript Accepted : Mar 16 2019 |
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