# Econometrica

## Journal Of The Econometric Society

### An International Society for the Advancement of Economic Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Nov, 1997, Volume 65, Issue 6

# The Loser's Curse and Information Aggregation in Common Value Auctions

Jeroen M. Swinkels, Wolfgang Pesendorfer

We consider an auction in which $k$ identical objects of unknown value are auctioned off to $n$ bidders. The $k$ highest bidders get an object and pay the $k + 1$st bid. Bidders receive a signal that provides information about the value of the object. We characterize the unique symmetric equilibrium of this auction. We then consider a sequence of auctions $A_r$ with $n_r$ bidders and $k_r$ objects. We show that price converges in probability to the true value of the object if and only if both $k_r \rightarrow \infty$ and $n_r - k_r \rightarrow \infty$, i.e., both the number of objects and the number of bidders who do not receive an object go to infinity.