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In common value auctions the value of the item for sale is identical amongst bidders, but bidders have different information about the item's value. This stands in contrast to a private value auction where each bidder's private valuation of the item is different and independent of peers' valuations. A classic example of a pure common values auction is when a jar full of quarters is auctioned off. The jar will be worth the same amount to anyone. However, each bidder has a different guess about how many quarters are in the jar. Other, real life examples include Treasury bill auctions, initial public offerings, spectrum auctions, very prized paintings, art pieces, antiques etc. One important phenomenon occurring in common value auctions is the winner's curse. Bidders have only estimates of the value of the good. If, on average, bidders are estimating correctly, the highest bid will tend to have been placed by someone who overestimated the good's value. This is an example of adverse selection, similar to the classic "lemons" example of Akerlof. Rational bidders will anticipate the adverse selection, so that even though their information will still turn out to have been overly optimistic when they win, they do not pay too much on average. Sometimes the term winner's curse is used differently, to refer to cases in which naive bidders ignore the adverse selection and bid sufficiently more than a fully rational bidder would that they actually pay more than the good is worth. This usage is prevalent in the experimental economics literature, in contrast with the theoretical and empirical literatures on auctions.

Common value auctions and private value auctions are two extremes. Between these two extremes are interdependent value auctions (also called: affiliated value auctions), where bidder's valuations (e. g., ) can have a common value component and a private value component. The two components can be correlated so that one bidder's private valuation can influence another bidder's valuation. These types of auctions comprise most real world auctions and are sometimes confusingly referred to as common value auctions also.

In the following examples, a common value auction is modeled as a Bayesian game. We try to find a Bayesian Nash equilibrium (BNE), which is a function from the information held by a player, to the bid of that player. We focus on a symmetric BNE (SBNE), in which all bidders use the same function.

The following example is based on Acemoglu and Özdağlar. There are two bidders participating in a first price sealed bid auction for an object that has either high quality (value V) or low quality (value 0) to both of them. Each bidder receives a signal that can be either high or low, with probability 1/2. The signal is related to the true value as follows:
If at least one bidder receives a low signal, then the true value is 0. If both receive a high signal, then the true value is V.
This game has no SBNE in pure strategies. PROOF: Suppose that there was such an equilibrium b. This is a function from a signal to a bid, i. e., a player with signal x bids b(x). Clearly b(low)=0, since a player with low signal knows with certainty that the true value is 0 and does not want to pay anything for it. Also, b(high) ≤ V, otherwise there will be no gain in participation. Suppose bidder 1 has b1(high)=B1 > 0. We are searching the best response for bidder 2, b2(high)=B2. There are several cases:
The other bidder bids B2 < B1. Then, his expected gain is 1/2 (the probability that bidder 2 has a low signal) times −B2 (since in that case he wins a worthless item and pays b2(high)), plus 1/2 (the probability that bidder 2 has a high signal) times 0 (since in that case he loses the item). The total expected gain is −B2/2 which is worse than 0, so it cannot be a best response. The other bidder bids B2 = B1. Then, his expected gain is 1/2 times −B2, plus 1/2 times 1/2 times [V− B2] (since in that case, he wins the item with probability 1/2). The total expected gain is (V − 3 B2)/4. The bidder b2 bids B2 > B1. Then, his expected gain is 1/2 times −B2, plus 1/2 times [V− B2] (since in that case, he wins the item with probability 1). The total expected gain is (2 V − 4 B2)/4. The latter expression is positive only when B2 < V/2. But in that case, the expression in #3 is larger than the expression in #2: it is always better to bid slightly more than the other bidder. This means that there is no symmetric equilibrium. This result is in contrast to the private value case, where there is always a SBNE (see first price sealed bid auction).

Common value auctions are comparable to Bertrand competition. Here, the firms are the bidders and the consumer is the auctioneer. Firms "bid" prices up to but not exceeding the true value of the item. Competition among firms should drive out profit. The number of firms will influence the success or otherwise of the auction process in driving price towards true value. If the number of firms is small, collusion may be possible. See Monopoly, Oligopoly.