Working Paper 99-06
Department of Economics
University of North Carolina, Chapel Hill
http://www.unc.edu/depts/econ

 

Incentive Auctions and Information Revelation

Gary Biglaiser
Dept. of Economics
Gardner Hall,CB#3305
University of North Carolina
Chapel Hill, NC 27599-3305
919-966-4884 FAX 919-966-4986
gbliglais@email.unc.edu

 

Claudio Mezzetti
Dept. of Economics
Gardner Hall, CB#3305
University of North Carolina
Chapel Hill, NC 27599-3305
919-966-5377 FAX 919-966-4986
mezzetti@email.unc.edu

 

Abstract

We study an incentive auction where multiple principals bid for the exclusive services, or effort, of a single agent. Each principal has private information about her valuation for these services and the agent has private information about his disutility of providing them. We characterize the equilibrium of this auction and examine the agent's incentives to reveal information about his type. We show that the effort level taken by the agent is smaller than in the standard auction for a known agent type and greater than in the single-principal, single-agent model.