American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Auctions in Markets: Common Outside Options and the Continuation Value Effect
American Economic Journal: Microeconomics
vol. 4,
no. 4, November 2012
(pp. 107–30)
Abstract
In this paper, we study auctions with outside options provided by future market interaction focusing on the revenue effects of some information revelation policies. We show that auctions with less information revelation may yield higher revenues. In particular, we show that it is never optimal for the auctioneer to reveal information after the auction. Moreover, it is also not optimal to reveal information before the auction unless bidders already have precise information on their own. Our model provides a novel explanation for the prevalence of opaque trading mechanisms, and it offers insights into information sharing in dynamic models of trade. (JEL D44, D83)Citation
Lauermann, Stephan, and Gábor Virág. 2012. "Auctions in Markets: Common Outside Options and the Continuation Value Effect." American Economic Journal: Microeconomics, 4 (4): 107–30. DOI: 10.1257/mic.4.4.107Additional Materials
JEL Classification
- D44 Auctions
- D83 Search; Learning; Information and Knowledge; Communication; Belief
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