Mike Shor: Research




Information Concentration in Common Value Auctions

Vlad Mares, Mikhael Shor

Revised November 2008


Abstract

We consider how information concentration affects a seller's revenue in common value auctions. The common value is a function of n random variables partitioned among m ≤ n bidders. For each partition, the seller devises an optimal mechanism. We show that, whenever the value function allows scalar sufficient statistics for each player's signals, the mechanism design problem is well- defined. Additionally, whenever a common regularity condition is satisfied, a coarser partition always reduces revenues. In particular, any merger or collusion among bidders reduces revenue.