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Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations

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  • Juan-José Ganuza

    () (Universitat Pompeu Fabra)

Abstract

I study a situation in which an auctioneer wishes to sell an object to one of N risk-neutral bidders with heterogeneous preferences. The auctioneer does not know bidders' preferences but has private information about the characteristics of the object, and must decide how much information to reveal prior to the auction. I show that the auctioneer has incentives to release less information than would be efficient and that the amount of information released increases with the level of competition (as measured by the number of bidders). Furthermore, in a perfectly competitive market the auctioneer would provide the efficient level of information.

Suggested Citation

  • Juan-José Ganuza, 2004. "Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 583-598, Autumn.
  • Handle: RePEc:rje:randje:v:35:y:2004:3:p:583-598
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    Citations

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    Cited by:

    1. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    2. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    3. Juan-José Ganuza & José S. Penalva, 2005. "On Information and Competition in Private Value Auctions," Working Papers 158, Barcelona Graduate School of Economics.
    4. Hernando-Veciana, Ángel & Tröge, Michael, 2011. "The insider's curse," Games and Economic Behavior, Elsevier, vol. 71(2), pages 339-350, March.
    5. Cristián Troncoso-Valverde, 2018. "Releasing information in private-value second-price auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 781-817, May.
    6. Ian Jewitt & Daniel Z. Li, 2017. "Cheap Talk Advertising in Auctions: Horizontally vs Vertically Differentiated Products," Working Papers 2017_03, Durham University Business School.
    7. Alessandro Bonatti & Dirk Bergemann, 2012. "Markets for Data," 2012 Meeting Papers 538, Society for Economic Dynamics.
    8. Roesler, Anne-Katrin & Szentes, Balázs, 2017. "Buyer-optimal learning and monopoly pricing," LSE Research Online Documents on Economics 84061, London School of Economics and Political Science, LSE Library.
    9. LI Daniel Zhiyun, 2012. "Seller Cheap Talk in Almost Common Value Auction," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-31, March.
    10. Daniel Z. Li, 2013. "Revealing Product Information to Bidders with Differentiated Preferences," Economics Bulletin, AccessEcon, vol. 33(3), pages 2235-2244.
    11. Alexandre de Cornière & Romain De Nijs, 2013. "Online Advertising and Privacy," Economics Series Working Papers 650, University of Oxford, Department of Economics.
    12. repec:aea:aecrev:v:107:y:2017:i:7:p:2072-80 is not listed on IDEAS

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