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

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 + 1st 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 Ar with nr bidders and kr objects. We show that price converges in probability to the true value of the object if and only if both kr ? ? and nr - kr ? ?, i.e., both the number of objects and the number of bidders who do not receive an object go to infinity.