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Auction Design with Interdependent Valuations: The Generalized Revelation Principle, Efficiency, Full Surplus Extraction and Information Acquisition

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Author Info

  • Claudio Mezzetti

    (Department of Economics, University of North Carolina at Chapel Hill and Department of Applied Mathematics, University of Venice)

Abstract

Agents' valuations are interdependent if they depend on the signals of all agents. Previous literature has claimed that with interdependent valuations and multidimen-sional, but independent, signals, efficient auction design is impossible. This paper shows that, on the contrary, it is always possible to find efficient auction mechanisms. Furthermore, it characterizes the conditions under which it is possible to extract the full surplus from the agents. Finally, it shows that it is also possible to provide agents with the incentives for the efficient, ex-ante acquisition of information. All these results rest on the application of a generalized version of the revelation principle, which requires that the designer uses two reporting stages.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.21.

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Date of creation: Mar 2003
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Handle: RePEc:fem:femwpa:2003.21

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Keywords: Auction Design; Interdependent Valuations; Generalized Revelation Principle; Efficiency;

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References

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  1. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Roger B. Myerson, 1988. "Mechanism Design," Discussion Papers 796, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Motty Perry & Philip J. Reny, 2002. "An Efficient Auction," Econometrica, Econometric Society, vol. 70(3), pages 1199-1212, May.
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Cited by:
  1. Sandro Brusco & Giuseppe Lopomo & S Viswanathan, 2004. "Merger Mechanisms," Levine's Bibliography 122247000000000379, UCLA Department of Economics.
  2. Stefano Galavotti & Nozomu Muto & Daisuke Oyama, 2011. "On efficient partnership dissolution under ex post individual rationality," Economic Theory, Springer, vol. 48(1), pages 87-123, September.

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