TY - JOUR
T1 - Information, stochastic dominance and bidding
T2 - The case of Treasury auctions
AU - Leoni, Patrick
AU - Lundtofte, Frederik
PY - 2017/4/1
Y1 - 2017/4/1
N2 - We explore the link between informativeness of signals, stochastic dominance and equilibrium bids in a multi-unit auction with risk averse bidders. We show that for a particular class of signal distributions, informativeness is related to conditional first-order stochastic dominance, so that a higher degree of informativeness in the signal-fundamental distribution induces higher bids and therefore higher revenues. Our framework is relevant for discussing total revenues and informativeness in US Treasury auctions.
AB - We explore the link between informativeness of signals, stochastic dominance and equilibrium bids in a multi-unit auction with risk averse bidders. We show that for a particular class of signal distributions, informativeness is related to conditional first-order stochastic dominance, so that a higher degree of informativeness in the signal-fundamental distribution induces higher bids and therefore higher revenues. Our framework is relevant for discussing total revenues and informativeness in US Treasury auctions.
KW - Common value auctions
KW - Informativeness
KW - Stochastic dominance
UR - http://www.scopus.com/inward/record.url?scp=85013243974&partnerID=8YFLogxK
U2 - 10.1016/j.econlet.2017.02.004
DO - 10.1016/j.econlet.2017.02.004
M3 - Journal article
AN - SCOPUS:85013243974
SN - 0165-1765
VL - 153
SP - 80
EP - 82
JO - Economics Letters
JF - Economics Letters
ER -