On the Choice of Obtaining and Disclosing the Commonvalue in Auctions

This paper introduces a game-theoretic analysis of auction settings where bidders´ private values depend on an uncertain common value, and only the auctioneer has the option to purchase information to eliminate that uncertainty. Here, the auctioneer´s mission is to reason about whether to purchase the information and, after purchasing it, whether to disclose it to the bidders. Unlike prior work, the model assumes that bidders are aware of the auctioneer´s option to purchase the external information but not necessarily aware of her decision. Our analysis of the individual revenue-maximizing strategies results in the characterization of a Bayesian Nash equilibrium profile. Based on the analysis, several somehow non-intuitive equilibrium characteristics are demonstrated, among which: (i) the availability of external information may reduce the auctioneer´s expected revenue, (ii) an expensive pricing of the information may actually be benefit for the auctioneer, (iii) in contrast to traditional results, an increase in the number of bidders does not necessarily results in an increase in the auctioneer´s expected revenue.