Discussion paper

DP3675 Information Revelation and Efficiency in Auctions

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.

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Citation

Sonin, K and A Mikusheva (2002), ‘DP3675 Information Revelation and Efficiency in Auctions‘, CEPR Discussion Paper No. 3675. CEPR Press, Paris & London. https://cepr.org/publications/dp3675