Revisiting the convergence theorem for competitive bidding in common value auctions (Q2099326)

In this article, the authors provide an alternative condition and an alternative proof for the convergence theorem of competitive bidding in a special class of common value auctions which is introduced by \textit{J. Bulow} and \textit{P. Klemperer} [Prices and the winner's curse. Working Paper. Stanford Graduate School of Business (1997)] and called wallet games, and obtain a positive result in the sense that the convergence result holds even when Milgrom's condition is not satisfied. This paper extends [\textit{R. Wilson}, Rev. Econ. Stud. 44, 511--518 (1977; Zbl 0373.90012)] and [\textit{P. R. Milgrom}, Econometrica 47, 679--688 (1979; Zbl 0415.90100)] to situations to which their conditions cannot be applied, although its apparent limitation is that it cannot be applied to general common value auctions which are not wallet games. It is shown (see Theorem 1): In a wallet game with \(E[X_i]=\nu(<\infty)\) where \(\nu\) is known \[ W_n-V_n \stackrel{p}{\longrightarrow}O \] where \(W_n=\max\{b(X_1;n),\ldots , b(X_n;n)\}\) and \(V_n=\frac{\sum_{i=1}^nX_i}{n}\).