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Optimal Design for an Informed Auctioneer

Seung Han Yoo

No 1702, Discussion Paper Series from Institute of Economic Research, Korea University

Abstract: Each seller's quality, not associated with a contractible action, making a contract incomplete, a principal seeks a better-informed auctioneer to tackle the problem. To induce the auctioneer's truthful quality reports for multiple sellers, the principal constructs the first-order absolute alignment that is aligned with a benchmark's absolute criterion. The optimal compensation for the auctioneer highlights a new role for reserve prices as a revelation device. In addition, we design a practical auction format to implement the optimal mechanism. Finally, this mechanism is applied to asymmetric seller auctions to relax the long-lasting assumption: common knowledge of asymmetric distributions.

Keywords: First-order absolute alignment; Auction; Revelation device (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (1)

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