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The public release of information in first-price sealed-bid auctions

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  • François Maréchal

    ()

  • Pierre-Henri Morand

    ()

Abstract

We determine the conditions under which the seller in a first-price sealed-bid auction has an incentive to reveal his private information about the mean of bidders’ valuations in order to increase his expected revenue. With risk-neutral bidders, we show that the seller’s expected revenue is higher when information is revealed. However, when bidders are risk-averse, this result does not necessarily hold; it depends on the bidders’ risk-aversion level and on the number of bidders. Copyright Springer-Verlag 2012

Suggested Citation

  • François Maréchal & Pierre-Henri Morand, 2012. "The public release of information in first-price sealed-bid auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 16(4), pages 323-330, December.
  • Handle: RePEc:spr:reecde:v:16:y:2012:i:4:p:323-330
    DOI: 10.1007/s10058-012-0115-9
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    References listed on IDEAS

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    1. Bruno Biais & Peter Bossaerts, 1998. "Asset Prices and Trading Volume in a Beauty Contest," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 307-340.
    2. Jehiel, Philippe, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.
    3. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    4. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
    5. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
    6. Calin Valsan & Robert Sproule, 2006. "Hedonic Models and Pre-Auction Estimates: Abstract Art Revisited," Economics Bulletin, AccessEcon, vol. 26(5), pages 1-10.
    7. von Ungern-Sternberg, Thomas, 1991. "Swiss Auctions," Economica, London School of Economics and Political Science, vol. 58(231), pages 341-357, August.
    8. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    9. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
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    More about this item

    Keywords

    Auctions; Information; Risk-aversion; D44; D81;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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