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Informational Size and Efficient Auctions

  • Richard McLean

    ()

    (Department of Economics, Rutgers University)

  • Andrew Postlewaite

    ()

    (Department of Economics, University of Pennsylvania)

We develop an auction model for the case of interdependent values and multidimensional signals in which agents’ signals are correlated. We provide conditions under which a modification of the Vickrey auction which includes payments to the bidders will result in an ex post efficient outcome. Furthermore, we provide a definition of informational size such that the necessary payments to bidders will be arbitrarily small if agents are sufficiently informationally small.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/03-011.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 03-011.

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Length: 27 pages
Date of creation: 30 Jul 2002
Date of revision: 13 Apr 2003
Handle: RePEc:pen:papers:03-011
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  1. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-61, March.
  2. Wolfgang Pesendorfer & Jeroen M. Swinkels, 1996. "Efficiency and Information Aggregation in Auctions," Discussion Papers 1168, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
  4. McAfee, R Preston & Reny, Philip J, 1992. "Correlated Information and Mechanism Design," Econometrica, Econometric Society, vol. 60(2), pages 395-421, March.
  5. Richard P. McLean & Andrew Postlewaite, 2006. "Implementation with Interdependent Valuations," Levine's Bibliography 122247000000001242, UCLA Department of Economics.
  6. Richard McLean & Andrew Postlewaite, . "Informational Size and Incentive Compatibility," CARESS Working Papres 99-14, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  7. P. Dasgupta & Eric Maskin, 1998. "Efficient Auctions," Harvard Institute of Economic Research Working Papers 1857, Harvard - Institute of Economic Research.
  8. Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
  10. Motty Perry & Philip J. Reny, 2002. "An Efficient Auction," Econometrica, Econometric Society, vol. 70(3), pages 1199-1212, May.
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