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American Economic Review Vol. 104 No. 7 2014

Auctions, Actions, and the Failure of Information Aggregation

Alp E. Atakan1; Mehmet Ekmekci2

1 Department of Economics, Koç University, Rumeli Feneri Yolu, Saryer 34450, Istanbul, Turkey (e-mail: ) · 2 Department of Economics, University of Pittsburgh, 4901 Wesley W. Posvar Hall, 230 South Bouquet Street, Pittsburgh, PA 15260 (e-mail: )

Abstract

We study a uniform-price auction where k identical common-value objects are allocated amongst z > k bidders who have imperfect signals about the state of the world. The common valuation is determined jointly by the state and an action that is chosen after winning an object. In large auctions, there are symmetric equilibria where the auction price aggregates no information. Moreover, market statistics other than price (e.g., the amount of rationing or the bid distribution) contain extra information about the state. In contrast, in standard large auctions without actions, the price aggregates all relevant information.

DOI
10.1257/aer.104.7.2014
Volume
104
Issue
7
Pages
2014-2048
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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