Linkage Principle, Multi-Dimensional Signals and Blind Auctions

Abstract

We compare the seller's expected revenue in a second price sealed bid auction for a single object in which bidders receive multidimensional signals. Bidders' valuations for the object depend on their signals and a signal observed privately by the seller. We show in various examples that the seller can be better off not revealing publicly his signal. Hence the linkage principle does not necessarily hold when bidders receive multidimensional signals.

Keywords: Auction Theory, Linkage Principle, Multidimensional Signals, Blind Auctions

JEL Classification: D44