The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.
Rational Expectations, Information Acquisition, and Competitive Bidding
Abstract
Most rational expectations market equilibrium models are not models of price formation, and naive mechanisms leading to such equilibria can be severely manipulable. In this paper, a bidding model is developed which has the market-like features that bidders act as price takers and that prices convey information. Higher equilibrium prices convey more favorable information about the quality of the objects being sold than do lower prices. Bidders can benefit from trading only if they have a transactions motive or if they have access to inside information. Apart from exceptional cases, prices are not fully revealing. A two stage model is developed in which bidders may acquire information at a cost before bidding and for which the equilibrium price is fully revealing, resolving a well-known paradox.
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Citations
Cites
COUNTERSPECULATION, AUCTIONS, AND COMPETITIVE SEALED TENDERS
Vickrey, W. (1961) · The Journal of Finance · doi:10.1111/j.1540-6261.1961.tb02789.x · Cited by 7,722
On the impossibility of informationally efficient markets
Stiglitz, J. E., & Grossman, S. J. (1980) · Columbia University · doi:10.7916/d8765r99 · Cited by 3,645
Good News and Bad News: Representation Theorems and Applications
Milgrom, P. R. (1981) · The Bell Journal of Economics · doi:10.2307/3003562 · Cited by 3,123
Self-citation
Cited by
Multiagent systems: algorithmic, game-theoretic, and logical foundations
(2009) · Choice Reviews Online · doi:10.5860/choice.46-5662 · Cited by 1,756
Information, trade and common knowledge
Milgrom, P., & Stokey, N. (1982) · Journal of Economic Theory · doi:10.1016/0022-0531(82)90046-1 · Cited by 1,729
Self-citationPutting Auction Theory to Work
Milgrom, P. (2004) · Cambridge University Press eBooks · doi:10.1017/cbo9780511813825 · Cited by 1,642
Self-citationA Theory of the Going-Public Decision
Chemmanur, T. J., & Fulghieri, P. (1999) · Review of Financial Studies · doi:10.1093/rfs/12.2.249 · Cited by 668
Do Foreigners Invest Less in Poorly Governed Firms?
Leuz, C., Lins, K. V., & Warnock, F. E. (2009) · Review of Financial Studies · doi:10.1093/rfs/hhn089 · Cited by 664
Metadata
- Authors
- Milgrom, P. R.
- Venue
- Econometrica
- Publisher
- JSTOR
- Published
- 1981-07
- Volume
- 49
- Issue
- 4
- Pages
- 921
- ISSN
- 0012-9682 (ISSN-L)
- OpenAlex
- W2125899808
- Cited by
- 500
- References
- 3
- FWCI
- 5.55
- Type
- journal article
- Language
- en
- Open access
- closed
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
