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Sequential Information Disclosure in Auctions

  • Dirk Bergemann
  • Achim Wambach

We propose a sequential auction mechanism for a single object in which the seller jointly determines the allocation and the disclosure policy. A sequential disclosure rule is shown to implement an ascending price auction in which each losing bidder learns his true valuation, but the winning bidder's information is truncated from below. As the auction ends, the winning bidder only has limited information, namely that his valuation is sufficiently high to win the auction. The sequential mechanism implements the allocation of the handicap auction of Esö and Szentes [10] but strengthens the participation constraints of the bidders from interim to posterior constraints. Due to the limited disclosure of information, the participation constraints (and incentive constraints) of all the bidders are satisfied with respect to all information revealed by the mechanism. In the special case in which the bidders have no private information initially, the seller can extract the entire surplus.

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Date of creation: 19 Sep 2013
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Handle: RePEc:cla:levarc:786969000000000771
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  1. Kavajecz, Kenneth A. & Keim, Donald B., 2005. "Packaging Liquidity: Blind Auctions and Transaction Efficiencies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(03), pages 465-492, September.
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  10. Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
  11. Blumenthal, Marsha A, 1988. "Auctions with Constrained Information: Blind Bidding for Motion Pictures," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 191-98, May.
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  13. Ye, Lixin, 2007. "Indicative bidding and a theory of two-stage auctions," Games and Economic Behavior, Elsevier, vol. 58(1), pages 181-207, January.
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  16. Elena Grigorieva & P. Herings & Rudolf Müller & Dries Vermeulen, 2007. "The private value single item bisection auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 107-118, January.
  17. Alex Gershkov, 2009. "Optimal auctions and information disclosure," Review of Economic Design, Springer;Society for Economic Design, vol. 13(4), pages 335-344, December.
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