Disclosure Policies in All-Pay Auctions with Affiliation

Chen, Bo; Serena, Marco; Wang, Zijia

doi:10.2139/ssrn.4382091

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Disclosure Policies in All-Pay Auctions with Affiliation

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Serena, Marco
Public Economics, MPI for Tax Law and Public Finance, Max Planck Society;

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Citation

Chen, B., Serena, M., & Wang, Z. (2023). Disclosure Policies in All-Pay Auctions with Affiliation. Working Paper of the Max Plank Institute for Tax Law and Public Finance, No. 2023-05. doi:10.2139/ssrn.4382091.

Cite as: https://hdl.handle.net/21.11116/0000-000F-3D8C-0

Abstract

We study all-pay auctions with private and affiliated binary values. To increase revenue (i.e., expected aggregate bid), the auction organizer can commit ex ante to fully disclosing or concealing bidders’ valuations. We find that full disclosure, as opposed to full concealment, always increases bidders’ expected payoffs. If affiliation in bidders’ valuations is low, full disclosure lowers ex ante expected revenue. If affiliation is high: 1) with two bidders, full disclosure lowers expected revenue, and 2) with many bidders, it tends to increase expected revenue. When the low valuation is zero, the auction becomes one with stochastic but affiliated participation, and information disclosure affects neither bidders’ payoffs nor the expected revenue.