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Optimal Design for an Informed Auctioneer

Author

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  • Seung Han Yoo

    (Department of Economics, Korea University, Seoul, Republic of Korea)

Abstract

Each seller's quality, not associated with a contractible action, making a contract incomplete, a principal seeks a better-informed auctioneer to tackle the problem. To induce the auctioneer's truthful quality reports for multiple sellers, the principal constructs the first-order absolute alignment that is aligned with a benchmark's absolute criterion. The optimal compensation for the auctioneer highlights a new role for reserve prices as a revelation device. In addition, we design a practical auction format to implement the optimal mechanism. Finally, this mechanism is applied to asymmetric seller auctions to relax the long-lasting assumption: common knowledge of asymmetric distributions.

Suggested Citation

  • Seung Han Yoo, 2017. "Optimal Design for an Informed Auctioneer," Discussion Paper Series 1702, Institute of Economic Research, Korea University.
    • Handle: RePEc:iek:wpaper:1702
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    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1702.pdf
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    References listed on IDEAS

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    Cited by:

    1. Seung Han Yoo, 2016. "Organizational Design with Non-Contractible Quality," Discussion Paper Series 1604, Institute of Economic Research, Korea University.

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    Keywords

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    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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