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Linkage Principle, Multi-dimensional Signals and Blind Auctions

Author

Listed:
  • Stefano Lovo

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Thierry Foucault

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

We compare the seller's expected revenue in a second price sealed bid auction for a single object in which bidders receive multidimensional signals. Bidders' valuations for the object depend on their signals and a signal observed privately by the seller. We show in various examples that the seller can be better off not revealing publicly his signal. Hence the linkage principle does not necessarily hold when bidders receive multidimensional signals.

Suggested Citation

  • Stefano Lovo & Thierry Foucault, 2011. "Linkage Principle, Multi-dimensional Signals and Blind Auctions," Working Papers hal-00592018, HAL.
    • Handle: RePEc:hal:wpaper:hal-00592018
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    References listed on IDEAS

    as
    1. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
    2. Kavajecz, Kenneth A. & Keim, Donald B., 2005. "Packaging Liquidity: Blind Auctions and Transaction Efficiencies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(3), pages 465-492, September.
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    Cited by:

    1. Heumann, Tibor, 2019. "An ascending auction with multi-dimensional signals," Journal of Economic Theory, Elsevier, vol. 184(C).
    2. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.

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    More about this item

    Keywords

    Auction Theory; Linkage Principle; Multidimensional Signals; Blind Auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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