Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations
AbstractI study a situation in which an auctioneer wishes to sell an object to one of N risk-neutral bidders with heterogeneous preferences. The auctioneer does not know bidders' preferences but has private information about the characteristics of the object, and must decide how much information to reveal prior to the auction. I show that the auctioneer has incentives to release less information than would be efficient and that the amount of information released increases with the level of competition (as measured by the number of bidders). Furthermore, in a perfectly competitive market the auctioneer would provide the efficient level of information.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 35 (2004)
Issue (Month): 3 (Autumn)
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- Alexandre de CorniÃ¨re & Romain De Nijs, 2013. "Online Advertising and Privacy," Economics Series Working Papers 650, University of Oxford, Department of Economics.
- Juan José Ganuza & José Penalva, 2005. "On Information and Competition in Private Value Auctions," Working Papers 158, Barcelona Graduate School of Economics.
- Cristián Troncoso Valverde, 2011. "Information Provision in Competing Auctions," Working Papers 25, Facultad de Economía y Empresa, Universidad Diego Portales.
- Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
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