Informational Size and Efficient Auctions

28 Pages Posted: 10 Aug 2002

See all articles by Richard P. McLean

Richard P. McLean

Rutgers University - Department of Economics

Andrew Postlewaite

University of Pennsylvania - Department of Economics

Date Written: July 2002

Abstract

We develop an auction model for the case of interdependent values and multidimensional signals in which agents' signals are correlated. We provide conditions under which a modification of the Vickrey auction which includes payments to the bidders will result in an ex post efficient outcome. Furthermore, we provide a definition of informational size such that the necessary payments to bidders will be arbitrarily small if agents are sufficiently informationally small.

Keywords: Auctions, Incentive Compatibility, Mechanism Design, Interdependent Values

JEL Classification: C70, D44, D60, D82

Suggested Citation

McLean, Richard P. and Postlewaite, Andrew, Informational Size and Efficient Auctions (July 2002). Available at SSRN: https://ssrn.com/abstract=322140 or http://dx.doi.org/10.2139/ssrn.322140

Richard P. McLean

Rutgers University - Department of Economics ( email )

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Andrew Postlewaite (Contact Author)

University of Pennsylvania - Department of Economics ( email )

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