Incomplete Information, High-Low Bidding and Public Information in First Price Auctions

Article Abstract:

High-low bidding refers to auctions of a series of objects where for a subset of the auctioned objects one of two buyers bids high on some objects and low on others while the other buyer does the reverse. This paper shows that high-low bidding does not imply collusive behavior among buyers. In particular, through a formal modeling of a noncooperative game of information acquisition and bidding decisions, it shows that high-low bidding can be obtained. The paper also demonstrates that if the cost of information to a seller is less than the equilibrium joint expected information cost of the buyers, then it pays the seller to provide public information. Finally, if the provision of public information is not feasible but a seller can know whether buyers have acquired information, then it pays the seller to make known to the buyers and to pursue a policy that just prior to the start of an auction the seller will announce which buyer has acquired information. (Reprinted by Permission of Publisher).

Information theory, Competitive Bidding

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On the Reswitching and Convergence Properties of Research and Development Rivalry

Article Abstract:

Lee (1983) developed a dynamic game model of research and development (R and D) rivalry. This testable theory of R and D is analyzed. The model is presented, and qualitatively solved. The model validates the importance of the payoff function in determining the equilibruim outcomes of a dynamic game model of R and D, and the robustings of the reswitching and convergence properties. Other areas considered are the antitrust puzzle and differing market shares. A graph is included. An appendix gives proofs.

Competition (Economics)

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On the Reswitching and Convergence Properties of Research & Development Rivalry

Article Abstract:

Lee's dynamic game model of R&D rivalry is analyzed. The reswitching property of R&D rivalry states that after gaining a technological edge against a rival, a decision maker will stop R&D until the edge is narrowed. The convergence property states that when the technology levels of two rivals differ by a wide margin, the inferior rival will be the only one doing R&D.

Management science, Industrial research, Technology, Decision theory, Research and Development, Competition

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