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On Information And Competition In Private Value Auctions

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  • Juan-José Ganuza

    ()

  • José S. Penalva Zuasti

    ()
    (CEMFI, Centro de Estudios Monetarios y Financieros)

Abstract

This paper studies the relationship between the auctioneer's provision of information and the level of competition in private value auctions. We use a general notion of informativeness which allows us to compare the efficient with the (privately) optimal amount of information provided by the auctioneer. We show that it is not optimal for the auctionner to provide the efficient level of information. We also look at the effect of competition as parameterized by the number of participants in the auction. We find that both the optimal and the efficient level of information increase with the number of participants in the auction, and both converge when the number of bidders goes to infinity.

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Bibliographic Info

Paper provided by CEMFI in its series Working Papers with number wp2005_0503.

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Date of creation: Feb 2005
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Handle: RePEc:cmf:wpaper:wp2005_0503

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Keywords: Auctions; competition; private values; optimal and efficient provision of information.;

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References

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  1. Olivier Compte & Philippe Jehiel, 2005. "Auctions and Information acquisition: Sealed-bid or Dynamic Formats?," Levine's Bibliography 784828000000000495, UCLA Department of Economics.
  2. Dirk Bergemann & Juuso Vaimaki, 2000. "Information Acquisition and Efficient Mechanism Design," Cowles Foundation Discussion Papers 1248, Cowles Foundation for Research in Economics, Yale University.
  3. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
  4. Stegeman, Mark, 1996. "Participation Costs and Efficient Auctions," Journal of Economic Theory, Elsevier, vol. 71(1), pages 228-259, October.
  5. Kavajecz, Kenneth A. & Keim, Donald B., 2005. "Packaging Liquidity: Blind Auctions and Transaction Efficiencies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(03), pages 465-492, September.
  6. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Jonathan Levin & Susan Athey, 2001. "The Value of Information in Monotone Decision Problems," Working Papers 01003, Stanford University, Department of Economics.
  8. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
  9. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  10. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
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Citations

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Cited by:
  1. Carlos Canon, 2011. "Matching & Information Provision by One-Sided and Two-Sided Platforms," Working Papers 11-20, NET Institute, revised Oct 2011.
  2. Simon Board, 2009. "Revealing information in auctions: the allocation effect," Economic Theory, Springer, vol. 38(1), pages 125-135, January.
  3. Vasiliki Skreta, 2008. "On the Informed Seller Problem: Optimal Information Disclosure," Working Papers 08-10, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Cristián Troncoso Valverde, 2011. "Information Provision in Competing Auctions," Working Papers 25, Facultad de Economía y Empresa, Universidad Diego Portales.

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