Publication Date: July 2013
Revision Date: October 2014
We propose a sequential auction mechanism for a single object in which the seller jointly determines the allocation and the disclosure policy. A sequential disclosure rule is shown to implement an ascending price auction in which each losing bidder learns his true valuation, but the winning bidder’s information is truncated from below. As the auction ends, the winning bidder only has limited information, namely that his valuation is suﬀiciently high to win the auction. The sequential mechanism implements the allocation of the handicap auction of Esö and Szentes  but strengthens the participation constraints of the bidders from interim to posterior constraints. Due to the limited disclosure of information, the participation constraints (and incentive constraints) of all the bidders are satisﬁed with respect to all information revealed by the mechanism. In the special case in which the bidders have no private information initially, the seller can extract the entire surplus.
Independent private value auction, Sequential disclosure, Ascending auctions, Information structure, Interim equilibrium, Posterior equilibrium
JEL Classification Codes: C72, D44, D82, D83
See CFP: 1490