COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 531

"Competitive Bidding and Proprietary Information"

Richard Engelbrecht-Wiggans and Robert J. Weber

1979

The auction of an object is considered, for the case in which one bidder is better-informed than the others concerning the actual value of the object. An equilibrium point solution of the competitive bidding game is determined; at this equilibrium, the expected revenue of the less-well-informed bidders is zero. The case of an object which can take only values from a discrete set is dealt with as the limit of auctions of continuously-valued objects.