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Informational Size and Efficient Auctions

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  • Richard McLean
  • Andrew Postlewaite

Abstract

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, Wiley-Blackwell.

Suggested Citation

  • Richard McLean & Andrew Postlewaite, 2004. "Informational Size and Efficient Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 809-827.
    • Handle: RePEc:oup:restud:v:71:y:2004:i:3:p:809-827
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2004.00305.x
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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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