Auction Theory, 2nd Edition

Chapter | Eight

Asymmetries and Other

Complications

The symmetric model with interdependent values and affiliated signals provides

many important insights into the functioning of different auction institutions.

First, the three common formats—the first-price, second-price, and English

auctions—can be unambiguously ranked in terms of revenue. Second, the release

of public information in any of the three formats erodes the exclusivity of bid-

ders’information, dissipating informational rents and leading to higher revenues.

When bidders are ex ante symmetric, both categories of results hold regardless

of the specific valuation function that bidders have and the specific distribution

of their signals. The theory is both powerful and elegant.

This chapter strikes ...