Optimal Auctions With Signaling Bidders

Olivier Bos and Martin Pollrich

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We study optimal auctions in a symmetric private values setting, where bidders’ care about winning the object and a receiver’s inference about their type. We reestablish revenue equivalence when bidders’ signaling concerns are linear, and the auction makes participation observable via an entry fee. With convex signaling concerns, optimal auctions are fully transparent: every standard auction, which reveals all bids yields maximal revenue. With concave signaling concerns there is no general revenue ranking. We highlight a trade-off between maximizing revenue derived from signaling, and extracting information from bidders. Our methodology combines tools from mechanism design with tools from Bayesian persuasion.

Keywords: optimal auctions; revenue equivalence; Bayesian persuasion; information design (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Pages: 19
Date: 2020-02
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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Citations: View citations in EconPapers (6)

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Working Paper: Optimal auctions with signaling bidders (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2020_158

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