Revenue Maximization with Partially Verifiable Information

I consider a seller selling a good to bidders with two-dimensional private information: their valuation for a good and their characteristic. While valuations are non-verifiable, characteristics are partially verifiable and convey information about the distribution of a bidder’s valuation. I derive the revenue-maximizing mechanism and show that it can be implemented by introducing a communication stage before an auction. I show that granting bidders a right to remain anonymous, i.e., to refuse participation in the communication stage, leaves the optimal mechanism unchanged and provides no benefits for the bidders.

Reuter, Marco (2023), Revenue Maximization with Partially Verifiable Information, ZEW Discussion Paper Nr. 23-051, Mannheim.