A Theory of Indicative Bidding

• 成果类型: Article
• 署名作者: Quint, Daniel; Hendricks, Kenneth
• 署名单位: University of Wisconsin System; University of Wisconsin Madison; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20160290
• 发表日期: 2018
• 页码: 118-151
• 关键词: 1st-price auctions; reserve prices; cheap-talk; entry; PARTICIPATION; MODEL

摘要

When selling a business by auction, sellers typically use indicative bids nonbinding preliminary bids to select a small number of bidders to conduct due diligence and submit binding offers. We show that if entry into the auction is costly, indicative bids can be informative: symmetric equilibrium exists in weakly increasing strategies, with bidders pooling over a finite number of bids. The equilibrium helps the seller select high value bidders with higher likelihood, although the highest value bidders are not always selected. When the number of potential bidders is large, revenue and total surplus are both higher than when entry is unrestricted.