Informational Size and Efficient Auctions

Richard McLean and Andrew Postlewaite

The Review of Economic Studies, 2004, vol. 71, issue 3, 809-827

Abstract: We develop an auction model for the case of interdependent values and multidimensional signals in which agents' signals are correlated. We provide conditions under which a modification of the Vickrey auction which includes payments to the bidders will result in an ex post efficient outcome. Furthermore, we provide a definition of informational size such that the necessary payments to bidders will be arbitrarily small if agents are sufficiently informationally small. Copyright 2004, Wiley-Blackwell.

Date: 2004
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