Discussion paper

DP16832 Information Choice in Auctions

The choice of an auction mechanism influences which object characteristics bidders learn about and whether the object is allocated efficiently. Some object characteristics are valued equally by all bidders and thus are inconsequential for the efficient allocation. Others matter only to certain bidders, and thus determine the bidder with the highest object value. I show that the efficient auction is the second-price auction: it induces bidders to learn exclusively about object characteristics which matter only to them. An independent private value framework arises endogenously.

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Citation

Bobkova, N (2021), “DP16832 Information Choice in Auctions”, CEPR Press Discussion Paper No. 16832. https://cepr.org/publications/dp16832