Hiding Information in Open Auctions with Jump Bids
Abstract: We analyze a rationale for hiding information in open auction formats. We focus on the incentives for a bidder to call a price higher than the highest standing one in order to prevent the remaining active bidders from aggregating more accurate information that could be gathered by observing the exact drop out values of the exiting bidders. Necessary conditions for the existence of jump bids with such motivations are provided. Finally, we show that there is no clear-cut effect of jump bids on efficiency and expected revenue and introduce several specific results.
