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Lauermann, Stephan, and
Gábor Virág. 2012. "Auctions in Markets: Common Outside Options and the Continuation Value Effect."
,
4(4): 107-30.
Show Article Details
DOI: 10.1257/mic.4.4.107
Abstract:In this paper, we study auctions with outside options provided by future market interaction focusing on the revenue effects of some information revelation policies. We show that auctions with less information revelation may yield higher revenues. In particular, we show that it is never optimal for the auctioneer to reveal information after the auction. Moreover, it is also not optimal to reveal information before the auction unless bidders already have precise information on their own. Our model provides a novel explanation for the
prevalence of opaque trading mechanisms, and it offers insights into
information sharing in dynamic models of trade. (JEL D44, D83)
Additional links:
Online Appendix
Authors:
Lauermann, Stephan (U MI)
Virág, Gábor (U Toronto)
JEL Classifications:
D44: Auctions
D83: Search; Learning; Information and Knowledge; Communication; Belief
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