The Effects of Post-Auction Bargaining between Bidders

Piotr Dworczak
Stanford Graduate School of Business

March 1, 2015

Abstract:

I study an auction model in which the auction is followed by bargaining between bidders. Bidders with multi-unit demand bid for an object and then bargain over additional units. In the presence of post-auction interaction between players, equilibrium bidding strategies are sensitive to the amount and nature of information about bidders’ valuations revealed by the auction. Standard auctions fail to allocate the good efficiently if some bids are announced. If the post-auction market is small enough, a first-price sealed-bid auction with no revelation of bids achieves efficiency. By choosing an optimal announcement policy the auctioneer can increase expected revenue.

The Effects of Post-Auction Bargaining between Bidders

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