Ignorance Is Bliss: Matching in Auctions with an Uninformed Seller

MPRA Paper from University Library of Munich, Germany

Abstract: In many auctions, matching between the bidder and seller raises the value of the contract for both parties. However, information about the quality of the match may be incomplete. We consider the case in which each bidder observes the quality of his match with the seller but the seller does not observe the quality of his matches with the bidders. Our objective is to determine whether it is in the seller's interest to observe the matches before selecting the winner. It is shown that the seller’s value for the information may be negative: the seller’s knowledge of the matches generates an asymmetry across bidders which depresses bids. The more matching matters, the greater the penalty associated with observing the matches.

Keywords: Asymmetries; Auctions; Auction Theory; Bidding; Information Revelation; Matching; Signaling (search for similar items in EconPapers)
JEL-codes: C72 C78 D44 D82 (search for similar items in EconPapers)
Date: 2008-08-14
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Citations: View citations in EconPapers (2)

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