When traders have private information about a common value good, adverse selection alone is insufficient to prevent trade of the good and estimation of the common value based upon the traders’ private information. We explore sufficient conditions for nonexistence of trading mechanisms in which trade of a common good occurs, along with cases in which such mechanisms exist.
We characterise the strategic equivalence among k-winner contests using simultaneous and sequential winner selection. We test this prediction of strategic equivalence using a series of laboratory experiments, contrasting 1-winner contests with 2-winner contests, varying in the latter whether the outcome is revealed sequentially or in a single stage. We find that in the long run, average bidding levels are similar across strategically-equivalent contests. However, adaptation in 2-winner contests is slower and less systematic, which is consistent with the property that simultaneous winner selection results in outcomes that are more random than in the 1-winner case.
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