The Insider's Curse

Angel Hernando-Veciana () and Michael Tröge
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Michael Tröge: ESCP-EAP

Microeconomics from EconWPA

Abstract: This paper studies an auction model in which one of the bidders, the insider, has better information about a common component of the value of the good for sale, than the other bidders, the outsiders. Our main result shows that the insider may have incentives to disclose her private information if she faces sufficiently strong competition from the outsiders. We also show that the insider can protect the value of her private information by hiding her presence in the auction to the outsiders. Finally, we analyze the implications of information revelation on the efficiency of the auction and on the auctioneer's expected revenue.

Keywords: auctions; asymmetric information; information disclosure. (search for similar items in EconPapers)
JEL-codes: D41 D44 D82 (search for similar items in EconPapers)
Date: Written 2005-03-17
Note: Type of Document - pdf; pages: 48. pdf file, embedded fonts, 48 pages at double space
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http://129.3.20.41/eps/mic/papers/0503/0503012.pdf (application/pdf)

Related works:
Working Paper: THE INSIDER'S CURSE (2005)
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