Extremal Information Structures in the First Price Auction
We study how the outcomes of a private-value first price auction can vary with bidders' information, for a fixed distribution of private values. In a two bidder, two value, setting, we characterize all combinations of bidder surplus and revenue that can arise, and identify the information structure that minimizes revenue. The extremal information structure that minimizes revenue entails each bidder observing a noisy and correlated signal about the other bidder's value. In the general environment with many bidders and many values, we characterize the minimum bidder surplus of each bidder and maximum revenue across all information structures. The extremal information structure that simultaneously attains these bounds entails an efficient allocation, bidders knowing whether they will win or lose, losers bidding their true value and winners being induced to bid high by partial information about the highest losing bid. Our analysis uses a linear algebraic characterization of equilibria across all information structures, and we report simulations of properties of the set of all equilibria.
|Date of creation:||Nov 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA|
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.yale.edu/
More information through EDIRC
|Order Information:|| Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eddie Dekel & Asher Wolinsky, 2000.
"Rationalizable Outcomes of Large Independent Private-Value First Price Discrete Auctions,"
1308, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Eddie Dekel & Asher Wolinsky, 2001. "Rationalizable outcomes of large independent private-value first-price discrete auctions," Discussion Papers 1321, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Dekel, E. & Wolinsky, A., 2000. "Rationalizable Outcomes of Large Independent Private-Value First-Price Discrete Auctions," Papers 00-13, Tel Aviv.
- Dekel, E. & Wolinsky, A., 2000. "Rationalizable Outcomes of Large Independent Private-Value First-Price Discrete Auctions," Papers 2000-13, Tel Aviv.
- FORGES , Françoise, 1993.
"Five Legitimate Definitions of Correlated Equilibrium in Games with Incomplete Information,"
CORE Discussion Papers
1993009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- FORGES, Françoise, . "Five legitimate definitions of correlated equilibrium in games with incomplete informations," CORE Discussion Papers RP 1071, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Azacis, Helmuts & Vida, Péter, 2012.
"Collusive Communication Schemes in a First-Price Auction,"
Cardiff Economics Working Papers
E2012/11, Cardiff University, Cardiff Business School, Economics Section.
- Helmuts Āzacis & Péter Vida, 2015. "Collusive communication schemes in a first-price auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(1), pages 125-160, January.
- Battigalli, Pierpaolo & Siniscalchi, Marciano, 2003. "Rationalizable bidding in first-price auctions," Games and Economic Behavior, Elsevier, vol. 45(1), pages 38-72, October.
- Kim, Jinwoo & Che, Yeon-Koo, 2004. "Asymmetric information about rivals' types in standard auctions," Games and Economic Behavior, Elsevier, vol. 46(2), pages 383-397, February.
When requesting a correction, please mention this item's handle: RePEc:cwl:cwldpp:1926. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Matthew C. Regan)
If references are entirely missing, you can add them using this form.