Decision Sciences
2 years ago

Revealing bidders' identities in auctions leads to lower revenue outcomes

Games and Economic Behavior
Knowing your opponents: Information disclosure and auction design
Andrew McClellan

Paper Summary

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In a second-price auction, revealing bidders' identities can lead to lower revenue than keeping them secret. This is because less informed bidders can suffer from the winner's curse when facing more knowledgeable opponents. The study suggests that not disclosing any information about who the bidders are can result in higher auction revenue. This finding highlights the importance of considering what information to reveal when designing auctions.