Efficiency in Optimal Auctions with Common Uncertainty
AbstractThis paper considers optimal auctions where individuals' valuations have both a private and common value component. We show that when the set of potential buyers and seller are symmetrically uninformed regarding the common value component, it may be socially optimal not to resolve this common uncertainty. Under the sufficient conditions provided to generate this outcome, efficiency will be restored in the optimal auction.
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Bibliographic InfoPaper provided by Brock University, Department of Economics in its series Working Papers with number 0502.
Length: 20 pages
Date of creation: Jan 2005
Date of revision: May 2005
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Auctions; Efficiency; Common value; Uncertainty;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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