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Sequential information disclosure in auctions

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  • Bergemann, Dirk
  • Wambach, Achim

Abstract

We propose a sequential auction mechanism for a single object in which the seller jointly determines the allocation and the disclosure policy. A sequential disclosure rule is shown to implement an ascending price auction in which each losing bidder learns his true valuation, but the winning bidder's information is truncated from below. As the auction ends, the winning bidder only has limited information, namely that his valuation is sufficiently high to win the auction. The sequential mechanism implements the allocation of the handicap auction of Eső and Szentes (2007) but strengthens the participation constraints of the bidders from interim to posterior constraints. Due to the limited disclosure of information, the participation constraints (and incentive constraints) of all the bidders are satisfied with respect to all information revealed by the mechanism. In the special case in which the bidders have no private information initially, the seller can extract the entire surplus.

Suggested Citation

  • Bergemann, Dirk & Wambach, Achim, 2015. "Sequential information disclosure in auctions," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 1074-1095.
  • Handle: RePEc:eee:jetheo:v:159:y:2015:i:pb:p:1074-1095
    DOI: 10.1016/j.jet.2014.11.004
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    References listed on IDEAS

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    1. Bernard Lebrun, 2010. "First-price auctions with resale and with outcomes robust to bid disclosure," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 165-178.
    2. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
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    10. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    11. Ye, Lixin, 2007. "Indicative bidding and a theory of two-stage auctions," Games and Economic Behavior, Elsevier, vol. 58(1), pages 181-207, January.
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    Citations

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    Cited by:

    1. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    2. Bergemann, Dirk & Pavan, Alessandro, 2015. "Introduction to Symposium on Dynamic Contracts and Mechanism Design," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 679-701.
    3. Krähmer, Daniel & Strausz, Roland, 2015. "Ex post information rents in sequential screening," Games and Economic Behavior, Elsevier, vol. 90(C), pages 257-273.
    4. Daniel Kraehmer, 2018. "Full surplus extraction in mechanism design with information disclosure," CRC TR 224 Discussion Paper Series crctr224_011_2018, University of Bonn and University of Mannheim, Germany.
    5. Krähmer, Daniel & Strausz, Roland, 2017. "Sequential versus static screening: An equivalence result," Games and Economic Behavior, Elsevier, vol. 106(C), pages 317-328.
    6. Dirk Bergemann & Alessandro Pavan, 2015. "Introduction to JET Symposium Issue on "Dynamic Contracts and Mechanism Design"," Cowles Foundation Discussion Papers 2016, Cowles Foundation for Research in Economics, Yale University.
    7. Ye, Lixin & Zhang, Chenglin, 2017. "Monopolistic nonlinear pricing with consumer entry," Theoretical Economics, Econometric Society, vol. 12(1), January.
    8. Asseyer, Andreas, 2016. "Optimal Information Disclosure and Collusion," Annual Conference 2016 (Augsburg): Demographic Change 145779, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Independent private value auction; Sequential disclosure; Ascending auctions; Information structure; Interim equilibrium; Posterior equilibrium;

    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
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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