Auction Theory, 2nd Edition

108 The Revenue Ranking (“Linkage”) Principle

7.2 PUBLIC INFORMATION

In many instances the seller may have information that is potentially useful to

the bidders. What should the seller do with this information? Should the seller

keep it hidden or should she reveal it publicly? Should she be strategic, revealing

the information only when it is favorable?

To address these and related questions, the symmetric model considered in

Chapter 6 needs to be slightly amended. Specifically, let S be a random variable

that denotes the information available to the seller. This information, if known,

would affect the valuations of the bidders, so we now write these as a function

of the N +1 signals

V

i

=v

i

(

S, X

1

,X

2

,..., X

N

)

and we assume, as before, that v

i

(

0

)

=0. In