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The University of Southampton
EconomicsPart of Economic, Social and Political Science

1211 Reputation in Multi-Unit Ascending Auction with Common Values (M. Kwiek)

Author: Maksymilian Kwiek (University of Southampton)

Paper number: 1211


This paper considers a multi-unit ascending auction with two players and common values. A large set of equilibria in this model is not robust to a small reputational perturbation. In particular, if there is a positive probability that there is a type who always demands many units, regardless of price, then the model has a unique equilibrium pay off profile. If this uncertainty is only on one side, then the player who is known to be normal lowers her demand in order to stop the auction immediately at the reserve price. Hence, her possibility committed opponent buys all the units she demands at the lowest level price. If the reputation is in both sides, then a War of Attrition emerges.

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