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Optimal Design for an Informed Auctioneer

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  • Seung Han Yoo

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

Abstract

This paper studies a competitive environment with an informed third party. A considerable number of people are employed to buy things for organizations. However, no satisfactory rationale for them is found in the standard mechanism. In the model, each seller has an additional information dimension that is not associated with a contractible action. The non-contractibility makes a contract incomplete in a direct mechanism with sellers. The solution is to hire a better informed auctioneer and construct an informational hierarchical structure by characterizing his incentives. 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.

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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    More about this item

    Keywords

    Two types of information; Auction; Information structure;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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