COMMON-VALUE AUCTIONS WITH DISCRETE PRIVATE INFORMATION

A first-price, sealed-bid, common-value auction with finite-valued, conditionally independent private information is studied. We show that the equilibrium in this auction game is characterized by all bidders using a symmetric mixed-strategy in which bids are randomized over intervals that are successive and non-overlapping for consecutively indexed signals. We also show that as the number of bidders grows, the winning bid (conditional on the true value of the object) converges to a non-degenerate random variable that is affiliated with the true value. Therefore, only partial information revelation is achieved in the limit. © 1991.