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Information Provision in Competing Auctions

  • Cristián Troncoso Valverde

    ()

    (Facultad de Economía y Empresa, Universidad Diego Portales)

This paper studies the incentives faced by competing auctioneers who can provide information to prospective bidders about their valuations of the objects for sale. We consider a model in which two sellers running second-price auctions compete to attract potential bidders by releasing information about valuations before bidders select trading partners. Thus, bidders' participation decisions are modeled in ex-post terms which allows us to investigate the effect of information on the composition of the set of types who visit each seller. We derive a set of necessary and su#cient conditions that supports full information provision as the unique equilibrium of the game. This result holds even if the number of bidders is restricted to two, which contrasts with the ndings of models with a single auctioneer where full information provision is never optimal. We also provide a characterization of information in terms of its strategic value to the sellers.

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File URL: http://www.udp.cl/descargas/facultades_carreras/economia/pdf/documentos_investigacion/wp25_Troncoso.pdf
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Paper provided by Facultad de Economía y Empresa, Universidad Diego Portales in its series Working Papers with number 25.

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Date of creation: Jun 2011
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Handle: RePEc:ptl:wpaper:25
Contact details of provider: Web page: http://www.udp.cl

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  1. Dirk Bergemann & Martin Pesendorfer, 2001. "Information Structures in Optimal Auctions," Cowles Foundation Discussion Papers 1323, Cowles Foundation for Research in Economics, Yale University.
  2. Simon Board, 2009. "Revealing information in auctions: the allocation effect," Economic Theory, Springer, vol. 38(1), pages 125-135, January.
  3. Vagstad, S., 2001. "Should Auctioneers Supply Early Information for Prospective Bidders?," Norway; Department of Economics, University of Bergen 0701, Department of Economics, University of Bergen.
  4. Juan-Jos� Ganuza, 2004. "Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 583-598, Autumn.
  5. Jean Guillaume Forand, 2007. "Competing Through Information Provision," 2007 Meeting Papers 661, Society for Economic Dynamics.
  6. Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
  7. Juan-José Ganuza & José S. Penalva Zuasti, 2005. "On Information And Competition In Private Value Auctions," Working Papers wp2005_0503, CEMFI.
  8. Burguet, Roberto & Sakovics, Jozsef, 1999. "Imperfect Competition in Auction Designs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 231-47, February.
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