Essays on the economics of information in auctions
by Knudsen, Helen C., Ph.D., UNIVERSITY OF PITTSBURGH, 2009, 73 pages; 3384833

Abstract:

Informational assumptions are an important aspect of the study of auctions in economic theory. However, there has been limited research into how the assumptions made by theorists impact their results. I explore two different aspects of the information available to bidders in auctions. The information that is important to the theoretical study of auctions can be divided into two types. First, there is information about the realized values of the bidders. I explore this through a model of an English auction with interdependent values where bidders are able to acquire the private information that is realized by other bidders. I find that the ability to costlessly acquire additional information about competitors does not impact the efficiency of the English auction. This is in line with other research into this type of information acquisition. I also briefly explore the revenue implications of bidders being able to acquire this type of information. The second type of information is about the overall structure from which the bidders values are drawn. In most theoretical treatments of auctions, it is assumed that bidders know this overall structure. I begin to relax this assumption by adding a small amount of uncertainty about the structure of one of the bidders valuation functions in auctions with interdependent values. Here I find that both the English auction and the second price auction are no longer efficient after the change in informational structure. I use data collected through economic experiments to test the theoretical predictions of this model and find that the English auction is more efficient both with the standard informational assumptions and with the change made in the informational structure. Both of these results suggest that the open format of an English auction, where information is revealed over the course of the auction, may mean that theoretical results with stronger assumptions about informational structures at the beginning of the auction are somewhat robust to those assumptions.

 
AdviserAndreas Blume
SchoolUNIVERSITY OF PITTSBURGH
SourceDAI/A 70-12, p. , Dec 2009
Source TypeDissertation
SubjectsEconomics
Publication Number3384833
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