We show that in a large production economy, the cost of collecting the information required by a planner to set nearly optimal prices is negligible relative to the total output of the economy. The cost of collecting the information required to set a nearly optimal production plan for each firm in the economy is not negligible. This conclusion stands in contrast to common opinion that determining optimal prices requires as much information as determining an optimal plan.
The auction of an object is considered, for the case in which one bidder is better-informed than the others concerning the actual value of the object. An equilibrium point solution of the competitive bidding game is determined; at this equilibrium, the expected revenue of the less-well-informed bidders is zero. The case of an object which can take only values from a discrete set is dealt with as the limit of auctions of continuously-valued objects.
Extensive use has been made of multiplicative bidding strategies in the literature relating to auctions of mineral leases. It is shown that, generally, multiplicative strategies are not in equilibrium. It is also established that an equilibrium bidding strategy is not a function merely of a sufficient statistic for the true value, or of any other of a class of related statistics, if an individual bidder observes more than one piece of information. The general insufficiency of a single simple statistic is briefly discussed and a special class of models is identified in which a single statistic is indeed strategically sufficient.