Knowing your opponents: Information disclosure and auction design

Andrew McClellan

Games and Economic Behavior, 2023, vol. 140, issue C, 173-180

Abstract: We study whether an auctioneer should let bidders see their opponents' identities in a common-value second-price auction when bidders are uncertain about whether their opponents are more informed than they are. The presence of information asymmetries among bidders can lead to an exacerbated winner's curse for less informed bidders and large decreases in auction revenue. We find that letting bidders see who their opponents are (and identify if a more informed bidder is present) leads to lower expected revenue than revealing no information about the identities of opposing bidders. Our results provide a simple and easily implementable auction-design recommendation and show the importance of considering what type of information to reveal when designing auctions.

Keywords: Auctions; Common-value; Asymmetry; Information disclosure (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:140:y:2023:i:c:p:173-180

DOI: 10.1016/j.geb.2023.03.008

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