Efficient competition through cheap talk: The case of competing auctions

Kyungmin Kim, Philipp Kircher

Research output: Contribution to journalArticlepeer-review


We consider a large market where auctioneers with private reservation values compete for bidders by announcing cheap-talk messages. If auctioneers run efficient first-price auctions, then there always exists an equilibrium in which each auctioneer truthfully reveals her type. The equilibrium is constrained efficient, assigning more bidders to auctioneers with larger gains from trade. The choice of the trading mechanism is crucial for the result. Most notably, the use of second-price auctions (equivalently, ex post bidding) leads to the non-existence of any informative equilibrium. We examine the robustness of our finding in various dimensions, including finite markets and equilibrium selection.
Original languageEnglish
Pages (from-to)1849–1875
Number of pages25
Issue number5
Publication statusPublished - 9 Oct 2015


  • competing auctions
  • cheap talk
  • directed search


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