Research Project: Market Selection, Frictions and the Information Content of the Prices
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Contributors
Funders
ID
EC.00090
Authors
Atakan, Alp Enver
Faculty Member
Publications
Market selection and the information content of prices
(Wiley, 2021) Atakan, Alp Enver; Ekmekçi, Mehmet; Department of Economics; Yes; College of Administrative Sciences and Economics
We study information aggregation when n bidders choose, based on their private information, between two concurrent common-value auctions. There are k(s) identical objects on sale through a uniform-price auction in market s and there are an additional k(r) objects on auction in market r, which is identical to market s except for a positive reserve price. The reserve price in market r implies that information is not aggregated in this market. Moreover, if the object-to-bidder ratio in market s exceeds a certain cutoff, then information is not aggregated in market s either. Conversely, if the object-to-bidder ratio is less than this cutoff, then information is aggregated in market s as the market grows arbitrarily large. Our results demonstrate how frictions in one market can disrupt information aggregation in a linked, frictionless market because of the pattern of market selection by imperfectly informed bidders.
