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Knowing your opponents: Information disclosure and auction design

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  • McClellan, Andrew

Abstract

We study whether an auctioneer should let bidders see their opponents' identities in a common-value second-price auction when bidders are uncertain about whether their opponents are more informed than they are. The presence of information asymmetries among bidders can lead to an exacerbated winner's curse for less informed bidders and large decreases in auction revenue. We find that letting bidders see who their opponents are (and identify if a more informed bidder is present) leads to lower expected revenue than revealing no information about the identities of opposing bidders. Our results provide a simple and easily implementable auction-design recommendation and show the importance of considering what type of information to reveal when designing auctions.

Suggested Citation

  • McClellan, Andrew, 2023. "Knowing your opponents: Information disclosure and auction design," Games and Economic Behavior, Elsevier, vol. 140(C), pages 173-180.
    • Handle: RePEc:eee:gamebe:v:140:y:2023:i:c:p:173-180
    DOI: 10.1016/j.geb.2023.03.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Auctions; Common-value; Asymmetry; Information disclosure;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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