Competitive Selection and Information Aggregation in Auctions
Do more competitive auctions better aggregate private information? Suppose n identical objects are offered for sale to k symmetric bidders with interdependent values. Do the n winning bids reveal more information about the state of demand for these objects when the number of bidders k rises? We find that competition decreases information if bidders’ private signals have a log-submodular reverse hazard rate function – overturning received wisdom. When private signals derive from a location family, and only one object is for sale (n=1), competition harms information aggregation if and only if the signal’s noise component follows a distribution which is less convex than Gumbel’s extreme value distribution. Drawing on extreme value theory, we quantify the amount of information in the perfectly competitive limit.

Please sign up for meetings here: docs.google.com/spreadsheets/d/1G0KdCfEkG4LYBuDSCLxyGRSEULv3_smLEEQMofG4X5U/edit#gid=0
Date: 23 October 2020, 14:15 (Friday, 2nd week, Michaelmas 2020)
Venue: Held on Zoom
Speaker: Peter Norman Sørensen (University of Copenhagen)
Organising department: Department of Economics
Part of: Nuffield Economic Theory Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Melis Clark