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Optimal disclosure of costly information packages in auctions

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  • Szech, Nora
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    Abstract

    In an independent, private values, second-price auction with entry fees we discuss the way in which a seller should optimally spread costly information among the bidders. We find that marginal gross revenues do not generally behave monotonically in total information release. In the two bidder case, essentially, any asymmetric allocation of information dominates the symmetric information allocation. Even the bidder who gets less information is willing to pay a higher entry fee for asymmetric information allocations than for the symmetric one. His entry fee coincides with that of the better informed bidder. Losses from allocating an amount of information non-optimally can be substantial.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Mathematical Economics.

    Volume (Year): 47 (2011)
    Issue (Month): 4-5 ()
    Pages: 462-469

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    Handle: RePEc:eee:mateco:v:47:y:2011:i:4:p:462-469

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    Web page: http://www.elsevier.com/locate/jmateco

    Related research

    Keywords: Asymmetric information; Information costs; Information release; Auctions;

    References

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    1. Crémer, Jacques & Spiegel, Yossi & Zheng, Charles, 2005. "Optimal Search Auctions," IDEI Working Papers 293, Institut d'Économie Industrielle (IDEI), Toulouse.
    2. Juan-JosÈ Ganuza & JosÈ S. Penalva, 2010. "Signal Orderings Based on Dispersion and the Supply of Private Information in Auctions," Econometrica, Econometric Society, vol. 78(3), pages 1007-1030, 05.
    3. Bergemann, Dirk & Pesendorfer, Martin, 2001. "Information Structures in Optimal Auctions," CEPR Discussion Papers 2991, C.E.P.R. Discussion Papers.
    4. Vagstad, Steinar, 2007. "Should auctioneers supply early information for prospective bidders?," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 597-614, June.
    5. Chade, Hector & Schlee, Edward, 2002. "Another Look at the Radner-Stiglitz Nonconcavity in the Value of Information," Journal of Economic Theory, Elsevier, vol. 107(2), pages 421-452, December.
    6. Xianwen Shi, 2007. "Optimal Auctions with Information Acquisition," Working Papers tecipa-302, University of Toronto, Department of Economics.
    7. Hagedorn, Marcus, 2009. "The value of information for auctioneers," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2197-2208, September.
    8. Dirk Bergemann & Xianwen Shi & Juuso Valimaki, 2008. "Information Acquisition in Interdependent Value Auctions," Working Papers tecipa-307, University of Toronto, Department of Economics.
    9. Nicola Persico, 1997. "Information Acquisition in Auctions," UCLA Economics Working Papers 762, UCLA Department of Economics.
    10. Péter Eső & Bal�zs Szentes, 2007. "Optimal Information Disclosure in Auctions and the Handicap Auction," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 705-731.
    11. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, 06.
    12. Crémer, Jacques & Spiegel, Yossi & Zheng, Charles Zhoucheng, 2007. "Auctions with Costly Information Acquisition," Staff General Research Papers 12709, Iowa State University, Department of Economics.
    13. Dirk Bergemann & Juuso Vaimaki, 2000. "Information Acquisition and Efficient Mechanism Design," Cowles Foundation Discussion Papers 1248, Cowles Foundation for Research in Economics, Yale University.
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