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Optimal disclosure in all-pay auctions with interdependent valuations

Author

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  • Chen, Bo
  • Chen, Bo

Abstract

We study all-pay auctions with one-sided private information and interdependent valuations. To sharpen the competition and maximize revenue, the auction organizer can design an information disclosure policy through Bayesian persuasion about the bidder with private information. We characterize optimal disclosure and find that optimal disclosure exhibits almost full disclosure, where the uninformed bidder can always narrow the informed bidder's private information down to at most two types. We also illustrate our characterization in a simple binary-type setting and investigate issues such as comparative statics, welfare, and efficiency.

Suggested Citation

  • Chen, Bo & Chen, Bo, 2024. "Optimal disclosure in all-pay auctions with interdependent valuations," Games and Economic Behavior, Elsevier, vol. 143(C), pages 204-222.
    • Handle: RePEc:eee:gamebe:v:143:y:2024:i:c:p:204-222
    DOI: 10.1016/j.geb.2023.11.010
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    More about this item

    Keywords

    All-pay auction; Contest; Bayesian persuasion; Information disclosure; Interdependent valuations;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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