Sequential Information Disclosure in Auctions

Dirk Bergemann and Achim Wambach

No 1900, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We consider the design of an optimal auction in which the seller can determine the allocation and the disclosure rule of the mechanism. Thus, in contrast to the standard analysis of a optimal auctions, the seller can explicitly design the disclosure of the information received by each bidder as his private information. We show that the optimal disclosure rule is a sequential disclosure rule, implemented in an ascending price auction. In the optimal disclosure mechanism, each losing bidder learns his true valuation, but the winning bidder only learns that his valuation is sufficiently high to win the auction. We show that in the optimal auction, the posterior incentive and participation constraints of all the bidders are satisfied. In the special case in which the bidders have no private information initially, the seller can extract the entire surplus.

Keywords: Independent private value auction; Sequential disclosure; Ascending auctions; Information structure; Interim equilibrium; Posterior equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 D83 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2013-07
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Sequential information disclosure in auctions (2015)
Working Paper: Sequential Information Disclosure in Auctions (2014)
Working Paper: Sequential Information Disclosure in Auctions (2013)
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