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19.07. BGSE Micro Workshop: Nina Bobkova

BGSE Micro Workshop with Nina Bobkova (University of Bonn)

Event details
What
  • BGSE Workshop
When Jul 19, 2017
from 12:00 to 13:00
Where Room 0.017
Contact Name Stephan Lauermann
Contact Email
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Topic

Knowing what matters for others: information choice in auctions

 

Abstract

An object for sale has a common component (resale value) and a idiosyncratic component (private taste). After the seller commits to a mechanism, the bidders decide between learning about the common component or the idiosyncratic component. If they learn more about their common component, their estimates are correlated stronger than if they learn about the idiosyncratic component.

Bidder's incentives to know what matters for others vary with the chosen mechanism. The second price auction induces the least correlation, and allocates the object ex-ante efficiently. The first price auction has the opposite effect: it induces the highest correlation. As the number of bidders increses, choosing the SPA over the FPA induces a higher expected revenue. Ex-ante full surplus extraction via a mechanism in the flavor of Cremer and McLean (1988) is infeasible.

 

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