Informed Sellers’ Auctions (join with Constantine Sorokin, HSE)

Elath Hall, 2nd floor, Feldman Building, Edmond J. Safra Campus
Sunday, October 21, 2018 - 14:00 to 16:00
Eyal Winter, HUJI

תקציר:In many auction environments sellers are better informed about bidders’ valuations than the bidders themselves (prominently sponsored ad auctions by Google). For such environments we derive a sharp and general optimal policy of information transmission in the case of independent private values. In this policy bidders whose valuation is below a certain threshold are provided with the entire information, but those whose valuation lies below it receive no information whatsoever. Surprisingly, the policy’s threshold is independent of the probability distribution over bidders’ valuations and the type of (efficient) auction mechanism used. It depends solely on the number of bidders. As such this policy can be easily made practical. Similar results are also derived for the bidders’ optimal policy. Our analysis builds on the approach of “Bayesian Persuasion” and on expressing revenues as a function of the  inverse distribution, which allows us to use important results on second order stochastic comparisons.