On the Informed Seller Problem: Optimal Information Disclosure

Abstract

We consider a revenue-maximizing seller who, before proposing a mechanism to sell her object(s), observes a vector of signals correlated with buyersívaluations. Each buyer knows only the signal that the seller observes about him, but not the signals she observes about other buyers. The seller Örst chooses how to disclose her information and then chooses a revenue-maximizing mechanism. We allow for very general disclosure policies, that can be random, public, private, or any mixture of these possibilities. Through the disclosure of information privately, the seller can create correlation in buyersítypes, which then consist of valuations plus beliefs. For the standard independent private values model, we show that information revelation is irrelevant: irrespective of the disclosure policy an optimal mechanism for this informed seller generates expected revenue that is equal to her maximal revenue under full information disclosure. For more general allocation environments that allow also for interdependent, for common values, and for multiple items, disclosure policies may matter, and the best the seller can do is to disclose no information at all.