Auction design with endogenously correlated buyer types

This paper studies optimal auction design when the seller can affect the buyers' valuations through an unobservable ex ante investment. The key insight is that the optimal mechanism may have the seller play a mixed investment strategy so as to create correlation between the otherwise (conditionally) independent valuations of buyers. The paper establishes conditions under which the seller can, in fact, extract the first best surplus almost fully.

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Year of publication:	2010
Authors:	Krähmer, Daniel
Publisher:	Frankfurt a. M. : Verein für Socialpolitik
Subject:	Auction \| ex ante investment \| full surplus extraction \| correlation \| mechanism design

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Series:	Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Auctions with Asymmetric Information ; A13-V1
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Conference Paper
Language:	English
Other identifiers:	654867496 [GVK] hdl:10419/37397 [Handle]
Classification:	C72 - Noncooperative Games ; D44 - Auctions ; D82 - Asymmetric and Private Information
Source:	EconStor

Persistent link: https://www.econbiz.de/10010272760