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Information concentration in common value environments

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  • Vlad Mares

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  • Mikhael Shor

    ()

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    Abstract

    We consider how information concentration affects a seller’s revenue in common value auctions. The common value is a function of $$n$$ random variables partitioned among $$m \le n$$ bidders. For each partition, the seller devises an optimal mechanism. We show that whenever the value function allows scalar sufficient statistics for each player’s signals, the mechanism design problem is well-defined. Additionally, whenever a common regularity condition is satisfied, a coarser partition always reduces revenues. In particular, any merger or collusion among bidders reduces revenue. Copyright Springer-Verlag Berlin Heidelberg 2013

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    Bibliographic Info

    Article provided by Springer in its journal Review of Economic Design.

    Volume (Year): 17 (2013)
    Issue (Month): 3 (September)
    Pages: 183-203

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    Handle: RePEc:spr:reecde:v:17:y:2013:i:3:p:183-203

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    Related research

    Keywords: Information concentration; Industry concentration; Mechanism design; Common value auctions; D44; L41; C72; D82;

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    1. Philip J. Reny & Shmuel Zamir, 2004. "On the Existence of Pure Strategy Monotone Equilibria in Asymmetric First-Price Auctions," Econometrica, Econometric Society, vol. 72(4), pages 1105-1125, 07.
    2. Cantillon, Estelle, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," Games and Economic Behavior, Elsevier, vol. 62(1), pages 1-25, January.
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