Silent Bidders Beware: New Auction Model Shakes Up Revenue Predictions
The article presents a new way to understand English auctions, where the auctioneer alternates between recognizing two bidders willing to pay the current price. Unlike traditional assumptions, bidders can choose to compete silently or openly. The study shows that in these auctions, the revenue advantage is only sometimes available due to incomplete public exits, making private information less valuable. This suggests that the simpler formula used in second-price auctions may be a better approximation for English auctions.