Information Concentration in Common Value Environments
We consider how information concentration affects a seller's revenue in common value auctions. The common value is a function of n random variables partitioned among m <= n bidders. For each partition, the seller devises an optimal mechanism. We show that, whenever the value function allows scalar sufficient statistics for each player's signals, the mechanism design problem is well-defined. Additionally, whenever a common regularity condition is satisfied, a coarser partition always reduces revenues. In particular, any merger or collusion among bidders reduces revenue. JEL Classification: D44, L41, C72, D82 Key words: information concentration, industry concentration, mechanism design, common-value auctions
Year of publication: |
2008-11
|
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Authors: | Shor, Mikhael ; Mares, Vlad |
Institutions: | Department of Economics, University of Connecticut |
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