On information and competition in private value auctions

Juan-José Ganuza and José S. Penalva

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: How much information does an auctioneer want bidders to have in a private value environment? We address this question using a novel approach to ordering information structures based on the property that in private value settings more information leads to a more disperse distribution of buyers’ updated expected valuations. We define the class of precision criteria following this approach and different notions of dispersion, and relate them to existing criteria of informativeness. Using supermodular precision, we obtain three results: (1) a more precise information structure yields a more efficient allocation; (2) the auctioneer provides less than the efficient level of information since more information increases bidder informational rents; (3) there is a strategic complementarity between information and competition, so that both the socially efficient and the auctioneer’s optimal choice of precision increase with the number of bidders, and both converge as the number of bidders goes to infinity.

Keywords: Auctions; Competition; Private Values; Informativeness Criteria (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2006-01, Revised 2006-07
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: On Information and Competition in Private Value Auctions (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:937

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