Journal Article

Informational Size and Efficient Auctions

Richard McLean and Andrew Postlewaite

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 71, issue 3, pages 809-827
Published in print July 2004 | ISSN: 0034-6527
Published online July 2004 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2004.00305.x
Informational Size and Efficient Auctions

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We develop an auction model for the case of interdependent values and multidimensional signals in which agents' signals are correlated. We provide conditions under which a modification of the Vickrey auction which includes payments to the bidders will result in an ex post efficient outcome. Furthermore, we provide a definition of informational size such that the necessary payments to bidders will be arbitrarily small if agents are sufficiently informationally small.

Keywords: D44

Journal Article.  8152 words.  Illustrated.

Subjects: Market Structure and Pricing

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