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Sequential Information Disclosure in Auctions

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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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File URL: http://cowles.econ.yale.edu/P/cd/d19a/d1900.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1900.

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Length: 36 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:cwl:cwldpp:1900

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Related research

Keywords: Independent private value auction; Sequential disclosure; Ascending auctions; Information structure; Interim equilibrium; Posterior equilibrium;

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  1. Dirk Bergemann & Martin Pesendorfer, 2001. "Information Structures in Optimal Auctions," Cowles Foundation Discussion Papers 1323, Cowles Foundation for Research in Economics, Yale University.
  2. 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).
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Cited by:
  1. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.

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