Abstract
When there are two bidders, releasing independent information in an English auction with private values makes the seller worse off. However, this is no longer true with more bidders: when there is enough competition, revelation benefits the auctioneer. In three examples the dividing case is shown to be three bidders. This allocation effect applies to other standard auctions and parallels the bundling decision in a multi-unit auction.
Similar content being viewed by others
References
Armstrong M. (2000) Optimal multi-object auctions. Rev Econ Stud 67, 455–481
Bergemann D., Pesendorfer M. (2003) Information structures in optimal auctions. Working paper, LSE
Bulow J., Klemeperer P. (1996) Auctions versus negotiations. Am Econ Rev 86, 180–194
Chakraborty I. (1999) Bundling decision for selling multiple objects. Econ Theory 13, 723–733
Engelbrecht-Wiggans R. (1988) On a possible benefit to bid takers from using multi-stage auctions. Manage Sci 34, 1109–1120
Eso, P., Szentes, B.: Optimal information disclosure in auctions: the handicap auction. Rev Econ Stud (forthcoming) (2006)
Ganuza J.-J. (2004) Ignorance promotes competition: an auction model with endogenous private valuations. RAND J Econ 35, 583–598
Ganuza J.-J., Penalva-Zuasti J. In information and competition in private value auctions. Working paper, Universitat Pompeu Fabra(2006)
Krishna V. (2002) Auction Theory. San Diego, Academic
Lewis T., Sappington D. (1994) Supplying information to facilitate price discrimination. Int Econ Rev 35, 309–327
Milgrom P., Weber R. (1982) A theory of auctions and competitive bidding. Econometrica 50, 1089–1122
Milgrom P. (2004) Putting Auction Theory to Work. Cambridge, Cambridge University Press
Palfrey T. (1983) Bundling decisions by a multiproduct monopolist with incomplete information. Econometrica 51, 463–484
Perry M., Reny P. (1999) On the failure of the linkage principle in multi-unit auctions. Econometrica 67, 895–900
Persico N. (2000) Information acquisition in auctions. Econometrica 68, 135–148
Rezende, L.: Mid-auction information acquisition. Working paper, University of Illinois (2005)
Vagstad, S.: Should auctioneers supply early information fo prospective bidders. Int J Ind Organ (forthcoming) (2006)
Author information
Authors and Affiliations
Corresponding author
Additional information
I would like to thank Jeremy Bulow, Willie Fuchs, Paul Klemperer, Rob McMillan, Phil Reny, Jeff Zwiebel and especially Andy Skrzypacz. I also grateful to two referees and an Associate Editor for a number of helpful comments.
Rights and permissions
About this article
Cite this article
Board, S. Revealing information in auctions: the allocation effect. Econ Theory 38, 125–135 (2009). https://doi.org/10.1007/s00199-006-0177-4
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00199-006-0177-4