Winning bids in auctions could be lower than expected, impacting revenue.
The article explores how private information affects sealed-bid first-price auctions. It looks at the lowest winning-bid distribution possible across all scenarios. The findings show that bidders are indifferent between their equilibrium bids and higher bids in certain situations. This research sets boundaries for bids and revenue with different value distributions. It also provides insights into identifying value distributions from winning bids data and comparing auction mechanisms.