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Informational Size and Efficient Auctions

  • RICHARD McLEAN
  • ANDREW POSTLEWAITE

We develop an auction model for the case of interdependent values and multidimensional signals in which agents' signals are correlated. We provide conditions under which a modification of the Vickrey auction which includes payments to the bidders will result in an "ex post" efficient outcome. Furthermore, we provide a definition of informational size such that the necessary payments to bidders will be arbitrarily small if agents are sufficiently informationally small. Copyright 2004 The Review of Economic Studies Ltd.

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Article provided by Wiley Blackwell in its journal The Review of Economic Studies.

Volume (Year): 71 (2004)
Issue (Month): (07)
Pages: 809-827

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Handle: RePEc:bla:restud:v:71:y:2004:i::p:809-827
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  1. Richard P. McLean & Andrew Postlewaite, 2006. "Implementation with Interdependent Valuations," Levine's Bibliography 122247000000001242, UCLA Department of Economics.
  2. P. Dasgupta & Eric Maskin, 1998. "Efficient Auctions," Harvard Institute of Economic Research Working Papers 1857, Harvard - Institute of Economic Research.
  3. Richard McLean & Andrew Postlewaite, . "Informational Size and Incentive Compatibility," CARESS Working Papres 99-14, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  4. Wolfgang Pesendorfer & Jeroen M. Swinkels, 1996. "Efficiency and Information Aggregation in Auctions," Discussion Papers 1168, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-61, March.
  6. 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.
  7. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
  8. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
  9. McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, vol. 60(2), pages 395-421, March.
  10. Motty Perry & Philip J. Reny, 2002. "An Efficient Auction," Econometrica, Econometric Society, vol. 70(3), pages 1199-1212, May.
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