Information revelation in auctions with common and private values

Xu Tan

Games and Economic Behavior, 2016, vol. 97, issue C, 147-165

Abstract: We explore the incentives to reveal verifiable private information when there are both common and private components to agents' valuations and when private information is held in both dimensions. When agents observe only one signal, they have no incentive to reveal the signal because such a revelation would negate their information advantage. However, when agents observe multiple signals, they may be incentivized to reveal certain signals that could lower their opponents' bids and thereby result in a higher profit from other signals. This paper shows that there exists an equilibrium with revelation of common-value signals in standard auctions, which is an efficient equilibrium that maximizes the social welfare and could provide the seller with a higher profit than a situation with no information revelation.

Keywords: Information revelation; Auctions; Two-dimensional values; Efficiency (search for similar items in EconPapers)
JEL-codes: D44 D82 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:97:y:2016:i:c:p:147-165

DOI: 10.1016/j.geb.2016.04.006

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