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Auction Design with Interdependent Valuations: The Generalized Revelation Principle, Efficiency, Full Surplus Extraction and Information Acquisition

Author

Listed:
  • Claudio Mezzetti

    (Department of Economics, University of North Carolina at Chapel Hill and Department of Applied Mathematics, University of Venice)

Abstract

Agents' valuations are interdependent if they depend on the signals of all agents. Previous literature has claimed that with interdependent valuations and multidimen-sional, but independent, signals, efficient auction design is impossible. This paper shows that, on the contrary, it is always possible to find efficient auction mechanisms. Furthermore, it characterizes the conditions under which it is possible to extract the full surplus from the agents. Finally, it shows that it is also possible to provide agents with the incentives for the efficient, ex-ante acquisition of information. All these results rest on the application of a generalized version of the revelation principle, which requires that the designer uses two reporting stages.

Suggested Citation

  • Claudio Mezzetti, 2003. "Auction Design with Interdependent Valuations: The Generalized Revelation Principle, Efficiency, Full Surplus Extraction and Information Acquisition," Working Papers 2003.21, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2003.21
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    References listed on IDEAS

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    1. Roger B. Myerson, 1988. "Mechanism Design," Discussion Papers 796, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. Motty Perry & Philip J. Reny, 2002. "An Efficient Auction," Econometrica, Econometric Society, vol. 70(3), pages 1199-1212, May.
    4. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
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    Cited by:

    1. Daske, Thomas & March, Christoph, 2024. "Efficient incentives with social preferences," Theoretical Economics, Econometric Society, vol. 19(3), July.
    2. Tingjun Liu & Dan Bernhardt, 2025. "Auctioning Control and Cash‐Flow Rights Separately," Econometrica, Econometric Society, vol. 93(3), pages 859-889, May.
    3. Stefano Galavotti & Nozomu Muto & Daisuke Oyama, 2011. "On efficient partnership dissolution under ex post individual rationality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 48(1), pages 87-123, September.
    4. Kunimoto, Takashi & Zhang, Cuiling, 2022. "Efficient bilateral trade via two-stage mechanisms: Comparison between one-sided and two-sided asymmetric information environments," Journal of Mathematical Economics, Elsevier, vol. 101(C).
    5. S. Viswanathan & S. Brusco & G. Lopomo, 2004. "Mergers Mechanisms," Econometric Society 2004 North American Winter Meetings 317, Econometric Society.

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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