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Revealing Product Information to Bidders with Differentiated Preferences

Author

Listed:
  • Daniel Z. Li

    (Durham University Business School)

Abstract

We study information disclosure in standard auctions where bidders preferences are horizontally differentiated, whose valuations depend on the matching between the product attribute and their preferences. The seller may reveal product information in the form of partition prior to the auction. Under a symmetric setting, we show in a close-form result that more precise information induces more dispersed distributions of bidders' posterior valuations, which, specifically, are ordered in terms of First Order Stochastic Dominance (FOSD). We also prove that optimal disclosure policy is extreme, in the sense that the seller will reveal either full or no information to the bidders, depending on the number of bidders.

Suggested Citation

  • Daniel Z. Li, 2013. "Revealing Product Information to Bidders with Differentiated Preferences," Economics Bulletin, AccessEcon, vol. 33(3), pages 2235-2244.
    • Handle: RePEc:ebl:ecbull:eb-13-00538
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Information Disclosure; Auction; Preference Differentiation; Valuation Dispersion;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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