Competitive Information Disclosure to an Auctioneer

67 Pages Posted: 5 Sep 2019 Last revised: 14 Apr 2021

See all articles by Stefan Terstiege

Stefan Terstiege

Maastricht University - Department of Economics

Cédric Wasser

University of Basel - Faculty of Business and Economics

Date Written: April 14, 2021

Abstract

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

Suggested Citation

Terstiege, Stefan and Wasser, Cédric, Competitive Information Disclosure to an Auctioneer (April 14, 2021). Available at SSRN: https://ssrn.com/abstract=3444994 or http://dx.doi.org/10.2139/ssrn.3444994

Stefan Terstiege

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Cédric Wasser (Contact Author)

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

HOME PAGE: http://www.cedricwasser.net

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