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Optimal Information Disclosure in Classic Auctions

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Optimal Information Disclosure in Classic Auctions. / Bergemann, Dirk; Heumann, Tibor; Morris, Stephen et al.
In: American Economic Review: Insights, Vol. 4, No. 3, 01.09.2022, p. 371-388.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Bergemann, D, Heumann, T, Morris, S, Sorokin, C & Winter, E 2022, 'Optimal Information Disclosure in Classic Auctions', American Economic Review: Insights, vol. 4, no. 3, pp. 371-388. https://doi.org/10.1257/aeri.20210504

APA

Bergemann, D., Heumann, T., Morris, S., Sorokin, C., & Winter, E. (2022). Optimal Information Disclosure in Classic Auctions. American Economic Review: Insights, 4(3), 371-388. https://doi.org/10.1257/aeri.20210504

Vancouver

Bergemann D, Heumann T, Morris S, Sorokin C, Winter E. Optimal Information Disclosure in Classic Auctions. American Economic Review: Insights. 2022 Sept 1;4(3):371-388. doi: 10.1257/aeri.20210504

Author

Bergemann, Dirk ; Heumann, Tibor ; Morris, Stephen et al. / Optimal Information Disclosure in Classic Auctions. In: American Economic Review: Insights. 2022 ; Vol. 4, No. 3. pp. 371-388.

Bibtex

@article{b0eb21e4778e4002981baa9e3360007b,
title = "Optimal Information Disclosure in Classic Auctions",
abstract = "We characterize the revenue-maximizing information structure in the second-price auction. The seller faces a trade-off: more information improves the efficiency of the allocation but creates higher information rents for bidders. The information disclosure policy that maximizes the revenue of the seller is to fully reveal low values (where competition is high) but to pool high values (where competition is low). The size of the pool is determined by a critical quantile that is independent of the distribution of values and only dependent on the number of bidders. We discuss how this policy provides a rationale for conflation in digital advertising. (JEL D44, D82, D83, M37)",
keywords = "General Earth and Planetary Sciences, General Environmental Science",
author = "Dirk Bergemann and Tibor Heumann and Stephen Morris and Constantine Sorokin and Eyal Winter",
year = "2022",
month = sep,
day = "1",
doi = "10.1257/aeri.20210504",
language = "English",
volume = "4",
pages = "371--388",
journal = "American Economic Review: Insights",
issn = "2640-205X",
publisher = "American Economic Association",
number = "3",

}

RIS

TY - JOUR

T1 - Optimal Information Disclosure in Classic Auctions

AU - Bergemann, Dirk

AU - Heumann, Tibor

AU - Morris, Stephen

AU - Sorokin, Constantine

AU - Winter, Eyal

PY - 2022/9/1

Y1 - 2022/9/1

N2 - We characterize the revenue-maximizing information structure in the second-price auction. The seller faces a trade-off: more information improves the efficiency of the allocation but creates higher information rents for bidders. The information disclosure policy that maximizes the revenue of the seller is to fully reveal low values (where competition is high) but to pool high values (where competition is low). The size of the pool is determined by a critical quantile that is independent of the distribution of values and only dependent on the number of bidders. We discuss how this policy provides a rationale for conflation in digital advertising. (JEL D44, D82, D83, M37)

AB - We characterize the revenue-maximizing information structure in the second-price auction. The seller faces a trade-off: more information improves the efficiency of the allocation but creates higher information rents for bidders. The information disclosure policy that maximizes the revenue of the seller is to fully reveal low values (where competition is high) but to pool high values (where competition is low). The size of the pool is determined by a critical quantile that is independent of the distribution of values and only dependent on the number of bidders. We discuss how this policy provides a rationale for conflation in digital advertising. (JEL D44, D82, D83, M37)

KW - General Earth and Planetary Sciences

KW - General Environmental Science

U2 - 10.1257/aeri.20210504

DO - 10.1257/aeri.20210504

M3 - Journal article

VL - 4

SP - 371

EP - 388

JO - American Economic Review: Insights

JF - American Economic Review: Insights

SN - 2640-205X

IS - 3

ER -