Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97251
Authors: 
Atakan, Alp E.
Ekmekci, Mehmet
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1553
Abstract: 
We study a market in which k identical and indivisible objects are allocated using a uniform-price auction where n > k bidders each demand one object. Before the auction, each bidder receives an informative but imperfect signal about the state of the world. The good that is auctioned is a common-value object for the bidders, and a bidder's valuation for the object is determined jointly by the state of the world and an action that he chooses after winning the object but before he observes the state. We show that there are equilibria in which the auction price is completely uninformative about the state of the world and aggregates no information even in an arbitrarily large auction. In the equilibrium that we construct, because prices do not aggregate information, agents have strict incentives to acquire costly information before they participate in the market. Also, market statistics other than price, such as the amount of rationing and bid distributions contain extra information about the state. Our findings sharply contrast with past work which shows that in large auctions where there is no ex-post action, the auction price aggregates information.
Subjects: 
Auctions
Large markets
Information Aggregation
Auctions
Large markets
Information Aggregation
JEL: 
C73
D44
D82
D83
Document Type: 
Working Paper

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