Secrecy in the first-price auction

This paper endogenizes bidders’ beliefs about their competition in a symmetric first-price auction with independent private values, by allowing bidders to decide whether to participate publicly or secretly. When public participation is more costly, bidders only participate secretly in the unique equilibrium. By contrast, when secret participation is slightly more costly, all symmetric equilibria exhibit a mixture of secret and public participation. In this case, switching to a second-price format increases expected revenue and expected total welfare among all symmetric