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Efficiency in Optimal Auctions with Common Uncertainty


  • Lester M.K. Kwong

    () (Department of Economics, Brock University)


This paper considers optimal auctions where individuals' valuations have both a private and common value component. We show that when the set of potential buyers and seller are symmetrically uninformed regarding the common value component, it may be socially optimal not to resolve this common uncertainty. Under the sufficient conditions provided to generate this outcome, efficiency will be restored in the optimal auction.

Suggested Citation

  • Lester M.K. Kwong, 2005. "Efficiency in Optimal Auctions with Common Uncertainty," Working Papers 0502, Brock University, Department of Economics, revised May 2005.
  • Handle: RePEc:brk:wpaper:0502

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    More about this item


    Auctions; Efficiency; Common value; Uncertainty;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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