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Sequential Information Disclosure in Auctions

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  • Dirk Bergemann
  • Achim Wambach

Abstract

We consider the design of an optimal auction in which the seller can determine the allocation and the disclosure rule of the mechanism. Thus, in contrast to the standard analysis of a optimal auctions, the seller can explicitly design the disclosure of the information received by each bidder as his private information. We show that the optimal disclosure rule is a sequential disclosure rule, implemented in an ascending price auction. In the optimal disclosure mechanism, each losing bidder learns his true valuation, but the winning bidder only learns that his valuation is sufficiently high to win the auction. We show that in the optimal auction, the posterior incentive and participation constraints of all the bidders are satisfied. In the special case in which the bidders have no private information initially, the seller can extract the entire surplus.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 786969000000000771.

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Date of creation: 19 Sep 2013
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Handle: RePEc:cla:levarc:786969000000000771

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  1. Grigorieva,Elena & Herings,P. Jean-Jacques & Müller,Rudolf & Vermeulen,Dries, 2002. "The private value single item bisection auction," Research Memorandum 051, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  2. Bergemann, Dirk & Pesendorfer, Martin, 2001. "Information Structures in Optimal Auctions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2991, C.E.P.R. Discussion Papers.
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Cited by:
  1. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers, University of Toronto, Department of Economics tecipa-497, University of Toronto, Department of Economics.

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