Ignorance Promotes Competition: an Auction Model with Endogenous Private Valuations

Juan-José Ganuza

No 107, Working Papers from Barcelona School of Economics

Abstract: We study a situation in which an auctioneer wishes to sell an object to one of N risk-neutral bidders with heterogeneous preferences. The auctioneer does not know bidders' preferences but has private information about the characteristics of the object, and must decide how much information to reveal prior to the auction. We show that the auctioneer has incentives to release less information than would be efficient and that the amount of information released increases with the level of competition (as measured by the number of bidders). Furthermore, in a perfectly competitive market the auctioneer would provide the efficient level of information.

Keywords: asymmetric Information; auctions; Private Values (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2015-09
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Citations: View citations in EconPapers (1)

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Working Paper: Ignorance promotes competition: An auction model with endogenous private valuations (2003)
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