Abstract: This paper examines a single-unit ascending auction where agents observe two-dimensional Gaussiansignals. The model combines the pure private-values model with the pure common-values model. Thechallenge is to characterize how the multi-dimensional signals observed by an agent are aggregated ontothat agent’s one-dimensional bid. The challenge is solved by projecting an agent’s private signals onto aone-dimensionalequilibrium statistic; the equilibrium bidding strategies are constructed as if each agentobserved only his own equilibrium statistic. An agent’s equilibrium statistic aggregates this agent’sprivate signals while taking into account the additional information deduced from the other agents’bids. In contrast to one-dimensional environments, an ascending auction may have multiple symmetricequilibria that yield different social surpluses.
JEL Classification: D40, D44, D82
Keywords: ascending auction, multi-dimensional signals, information aggregation, ex post equilibrium