On Information and Competition in Private Value Auctions

Abstract

This paper studies the relationship between the auctioneer s provision of information and the level of competition in private value auctions. We use a general notion of informativeness which allows us to compare the efficient with the (privately) optimal amount of information provided by the auctioneer. We show that in the private value setting more information increases the efficiency of the allocation while it also increases informational rents so that it is not optimal for the auctioneer to provide the efficient level of information. We also show that as the number of participants in the auction increases both the efficient and the optimal level of information increase and both converge when the number of bidders goes to infinity.