Efficiency in Optimal Auctions with Common Uncertainty
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.
|Date of creation:||Jan 2005|
|Date of revision:||May 2005|
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