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Revenue guarantees in auctions with a (correlated) common prior and additional information

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  • Yamashita, Takuro

Abstract

This paper considers auction environments with a (possibly correlated) common prior over bidders' values, where each bidder may have additional information (e.g., through information acquisition). Under certain conditions, we characterize the optimal mechanisms in terms of the expected revenue that is guaranteed given whatever additional information is available to the bidders. Even if the values are correlated,we do not necessarily have full-surplus extraction, and moreover, the optimal mechanism resembles those in the independently distributed cases. Specifically, we show that (i) a second-price auction is optimal among all the efficient mechanisms, and (ii) it is rate-optimal among all the mechanisms.

Suggested Citation

  • Yamashita, Takuro, 2018. "Revenue guarantees in auctions with a (correlated) common prior and additional information," TSE Working Papers 18-937, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:32880
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    Cited by:

    1. Larionov, Daniil & Pham, Hien & Yamashita, Takuro & Zhu, Shuguang, 2021. "First Best Implementation with Costly Information Acquisition," TSE Working Papers 21-1261, Toulouse School of Economics (TSE), revised Apr 2022.
    2. Benjamin Brooks & Songzi Du, 2021. "Optimal Auction Design With Common Values: An Informationally Robust Approach," Econometrica, Econometric Society, vol. 89(3), pages 1313-1360, May.

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    Keywords

    Mechanism design; Auction; Correlated private information; Information acquisition; Revenue guarantee;
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