Revenue Maximization with Partially Verifiable Information
41 Pages Posted: 4 Apr 2022 Last revised: 2 Nov 2022
Date Written: March 9, 2022
I consider a seller selling a good to bidders with two-dimensional private information: their valuation for a good and their characteristic. While valuations are non-verifiable, characteristics are partially verifiable and convey information about the distribution of a bidder's valuation. I derive the revenue-maximizing mechanism and show that it can be implemented by introducing a communication stage before an auction. I show that granting bidders a right to remain anonymous, i.e., to refuse participation in the communication stage, leaves the optimal mechanism unchanged and provides no benefits for the bidders.
Keywords: Mechanism Design, Auctions, Partially Verifiable Types, Communication
JEL Classification: D44, D82, D83
Suggested Citation: Suggested Citation