Optimal Entry Coordination in Auctions with Entry Cost (Work in Progress, about 50%)
This paper presents a framework for coordinating agents into an non-exclusive auction with bidding costs. Agents
possess private values, yet a cost is incurred to both obtain this information and to participate in the auction.
The entry strategy in a symmetric mixed equilibrium is, in general, inefficient and suboptimal. By applying the
revelation principle, the optimal communication strategy is identified. The auctioneer can ensure trade occurs,
earn higher revenue, and improve efficiency with the optimal recommendation. For any finite number of agents,
the optimal recommendation structure is solely dependent on the cost, with only two possible numbers of entrants appearing in the auction. The optimal recommendation structure is ex-ante efficient.