Competitive Information Disclosure to an Auctioneer
67 Pages Posted: 5 Sep 2019 Last revised: 14 Apr 2021
Date Written: April 14, 2021
We analyze how voluntary disclosure of information by bidders affects the outcome of optimally designed auctions. In a single-object auction environment, we assume that before the revenue-maximizing auctioneer designs the auction, bidders noncooperatively choose signal structures that disclose information about their valuations. We show that an equilibrium exists in this two-stage game and that in every equilibrium the object is sold with probability one. Our main result concerns the consequences of information disclosure for the auctioneer's revenue. If in the benchmark without disclosure the object remains unsold with positive probability, then disclosure yields strictly higher revenue in every equilibrium.
Keywords: information design, optimal auctions, disclosure
JEL Classification: D44, D82, D83
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