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Information disclosure in optimal auctions

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URI: https://hdl.handle.net/10016/34748
ISSN: 0167-7187
DOI: https://doi.org/10.1016/j.ijindorg.2018.11.004
UXXI: AR/0000022167
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information_IJIO_2019_ps.pdf (685.63 KB)
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2019-03-01
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Elsevier
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Abstract
This paper analyzes a situation in which the seller controls the accuracy of what potential buyers learn about their valu- ation of a go o d to b e sold. This setting is related to many real situations such as home sales, antique auctions, and digital platforms such as Google and Facebook selling online adver- tising slots. Two important questions arise: what is the op- timal selling mechanism, and what is the optimal disclosure policy of the seller. Under the assumption of private values, a simple auction with a reserve price is the optimal mechanism. What we show is that the amount of (costly) information pro- vided increases with the numb er of p otential bidders when using the optimal mechanism and is greater than when the object is always sold. Because information changes the distri- bution of a bidder’s expected valuations, the optimal reserve price also changes, so that the number of bidders (indirectly)
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Optimal auction, Private values, Information disclosure and reserve price
Bibliographic citation
Ganuza, J.-J., & Penalva, J. (2019). Information disclosure in optimal auctions. International Journal of Industrial Organization, 63, pp. 460–479.
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