DP3675 Information Revelation and Efficiency in Auctions

Author(s): Anna Mikusheva, Konstantin Sonin
Publication Date: December 2002
Keyword(s): allocative efficiency, auctions, information
JEL(s): D40, D80
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3675

We study the impact of information revelation on efficiency in auctions. In a constrained-efficient mechanism, i.e. a mechanism that is efficient subject to the incentive-compatibility constraint, any additional information available to bidders increases the expected efficiency of the mechanism. This result cannot be extended to a more general setup: in a second-price sealed-bid auction, revelation of information might lead to efficiency losses.