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Should Auctioneers Supply Early Information for Prospective Bidders?

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  • Vagstad, S.

Abstract

Consider an auction in which potential bidders must sink an entry investment before learning their values. Suppose the auction designer can make the bidders learn their value before entry. Such early information will induce screening of high-value bidders, and it will give rise to information rents and thereby a difference between the socially optimal auction and the auctioneer's preferred mechanism.

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Bibliographic Info

Paper provided by Department of Economics, University of Bergen in its series Norway; Department of Economics, University of Bergen with number 0701.

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Length: 18 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:fth:bereco:0701

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Postal: Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
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Web page: http://www.uib.no/econ/
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Keywords: AUCTIONS ; INVESTMENTS ; INFORMATION;

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References

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  1. Kjerstad, Egil & Vagstad, Steinar, 2000. "Procurement auctions with entry of bidders," International Journal of Industrial Organization, Elsevier, vol. 18(8), pages 1243-1257, December.
  2. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. French, Kenneth R & McCormick, Robert E, 1984. "Sealed Bids, Sunk Costs, and the Process of Competition," The Journal of Business, University of Chicago Press, vol. 57(4), pages 417-41, October.
  4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  5. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
  6. Paulo K. Monteiro & Flavio M. Menezes, 2000. "original papers : Auctions with endogenous participation," Review of Economic Design, Springer, vol. 5(1), pages 71-89.
  7. Samuelson, William F., 1985. "Competitive bidding with entry costs," Economics Letters, Elsevier, vol. 17(1-2), pages 53-57.
  8. Chakraborty, Indranil & Kosmopoulou, Georgia, 2001. "Auctions with endogenous entry," Economics Letters, Elsevier, vol. 72(2), pages 195-200, August.
  9. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-99, June.
  10. McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
  11. Hausch, Donald B & Li, Lode, 1993. "A Common Value Auction Model with Endogenous Entry and Information Acquisition," Economic Theory, Springer, vol. 3(2), pages 315-34, April.
  12. Engelbrecht-Wiggans, Richard & Nonnenmacher, Tomas, 1999. "A Theoretical Basis for 19th-Century Changes to the Port of New York Imported Goods Auction," Explorations in Economic History, Elsevier, vol. 36(3), pages 232-245, July.
  13. Harstad, Ronald M, 1990. "Alternative Common-Value Auction Procedures: Revenue Comparisons with Free Entry," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 421-29, April.
  14. Deltas, George & Engelbrecht-Wiggans, Richard, 2001. "Auctions with an inexpert bidder," Economics Letters, Elsevier, vol. 73(1), pages 35-42, October.
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Citations

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Cited by:
  1. Cristian Troncoso-Valverde, 2013. "Competing Auctions with Heterogeneous Goods," Working Papers 46, Facultad de Economía y Empresa, Universidad Diego Portales.
  2. Szech, Nora, 2011. "Optimal disclosure of costly information packages in auctions," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 462-469.
  3. Cristián Troncoso Valverde, 2011. "Information Provision in Competing Auctions," Working Papers 25, Facultad de Economía y Empresa, Universidad Diego Portales.
  4. Simon Board, 2009. "Revealing information in auctions: the allocation effect," Economic Theory, Springer, vol. 38(1), pages 125-135, January.

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