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Revenue maximization with partially verifiable information

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  • Reuter, Marco

Abstract

I consider a seller selling a good to bidders with two-dimensional private information: their valuation for a good and their characteristic. While valuations are non-verifiable, characteristics are partially verifiable and convey information about the distribution of a bidder's valuation. I derive the revenue-maximizing mechanism and show that it can be implemented by introducing a communication stage before an auction. I show that granting bidders a right to remain anonymous, i.e., to refuse participation in the communication stage, leaves the optimal mechanism unchanged and provides no benefits for the bidders.

Suggested Citation

  • Reuter, Marco, 2023. "Revenue maximization with partially verifiable information," ZEW Discussion Papers 23-051, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:280987
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    References listed on IDEAS

    as
    1. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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    More about this item

    Keywords

    Mechanism Design; Auctions; Partially Verifiable Types; Communication;
    All these keywords.

    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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