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In an environment of independent private values, we show that k-price auctions (k>2) with a large number of bidders are dominance solvable in two steps. Specifically, if bidders are rational and are certain that their opponents are rational (but without requiring deeper levels of reasoning), then bids converge to true valuations as the economy gets larger. Our model allows for heterogeneity in bidders' attitudes to risk and in the distributions from which valuations are drawn.
Published Online: 2012-5-28
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
