The Value Of Information In Auctions With Default Risk

After the close of an auction, the winning bidder may find that he is unable to carry out his bid offer. This paper seeks to determine what measures the seller should take to maximize his share of the surplus when bidders are privately informed about their risk of default. Special attention is paid to the effect of imposing a default penalty, the value of gathering information about each bidder's default risk, and the role of commitment.

Provided by: Munich Personal Repec Archive Topic: Data Management Date Added: Aug 2010 Format: PDF

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