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Optimal Disclosure of Costly Information Packages in Auctions

Optimal Disclosure of Costly Information Packages in Auctions
Author:

Nora Szech

links:
Source:

Journal of Mathematical Economics, 2011, Vol. 47, Issues 4-5, 462-469 DOI:10.1016/j.jmateco.2011.06.004

Date: 2011
Journal of Mathematical Economics, 2011, Vol. 47

In an independent, private values, second-price auction with entry fees we discuss the way in which a seller should optimally spread costly information among the bidders. We find that marginal gross revenues do not generally behave monotonically in total information release. In the two bidder case, essentially, any asymmetric allocation of information dominates the symmetric information allocation. Even the bidder who gets less information is willing to pay a higher entry fee for asymmetric information allocations than for the symmetric one. His entry fee coincides with that of the better informed bidder. Losses from allocating an amount of information non-optimally can be substantial.