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Auctions, Actions, and the Failure of Information Aggregation

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  • Alp E. Atakan
  • Mehmet Ekmekci

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.

Suggested Citation

  • Alp E. Atakan & Mehmet Ekmekci, 2014. "Auctions, Actions, and the Failure of Information Aggregation," American Economic Review, American Economic Association, vol. 104(7), pages 2014-2048, July.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:7:p:2014-48
    Note: DOI: 10.1257/aer.104.7.2014
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    References listed on IDEAS

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    6. Heumann, Tibor, 2019. "An ascending auction with multi-dimensional signals," Journal of Economic Theory, Elsevier, vol. 184(C).
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    8. José Luis Montiel Olea & Pietro Ortoleva & Mallesh Pai & Andrea Prat, 2021. "Competing Models," Working Papers 2021-89, Princeton University. Economics Department..
    9. Jose Luis Montiel Olea & Pietro Ortoleva & Mallesh M Pai & Andrea Prat, 2019. "Competing Models," Papers 1907.03809, arXiv.org, revised Nov 2021.
    10. Chahrour, Ryan & Gaballo, Gaetano, 2017. "Learning from prices: amplication and business fluctuations," Working Paper Series 2053, European Central Bank.
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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