Revenue Maximization with Partially Verifiable Information

41 Pages Posted: 4 Apr 2022 Last revised: 2 Nov 2022

Date Written: March 9, 2022

Abstract

I consider a seller selling a good to bidders with two-dimensional private information: their valuation for a good and their characteristic. While valuations are non-verifiable, characteristics are partially verifiable and convey information about the distribution of a bidder's valuation. I derive the revenue-maximizing mechanism and show that it can be implemented by introducing a communication stage before an auction. I show that granting bidders a right to remain anonymous, i.e., to refuse participation in the communication stage, leaves the optimal mechanism unchanged and provides no benefits for the bidders.

Keywords: Mechanism Design, Auctions, Partially Verifiable Types, Communication

JEL Classification: D44, D82, D83

Suggested Citation

Reuter, Marco, Revenue Maximization with Partially Verifiable Information (March 9, 2022). Available at SSRN: https://ssrn.com/abstract=4053767 or http://dx.doi.org/10.2139/ssrn.4053767
No contact information is available for Marco Reuter

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