Repeated Auctions with the Right of First Refusal and Asymmetric Information

Abstract: This paper characterizes a set of Nash equilibria in a first-price sealed-bid repeated auction with the right of first refusal using two bidders and asymmetric information regarding the bidders ’ value distributions. When contract value is constant from one auction to the next and winners ’ values are publicized, agents retain the value of incumbency and bids are identical to one-shot auctions. When each agents’ contract values are random across auctions, agents choose to bid away the full expected value of incumbency, providing a measure of the value of information in this context.