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On the Revelation of Provenance in Online Wine Auctions*

Published online by Cambridge University Press:  08 June 2012

Lester M.K. Kwong
Lester M.K. Kwong
Affiliation:
Department of Economics, Brock University, 500 Glenridge Ave., St. Catharines, Ontario,Canada, L2S 3A1.Email: lkwong@brocku.ca. Tel: + 1(905) 688–5550, ext. 5137.
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Abstract

This paper examines the social desirability to disclose pertinent information to participants in an optimal auction environment. In particular, we consider aspects of information which will affect all potential buyers in a uniform fashion. In the case of wine, such information may be interpreted as an unobservable dimension such as the quality or the storage condition of a bottle of wine. We show that when the participants in the auction are symmetrically uninformed in such a dimension, it may be socially optimal not to resolve this common uncertainty. Under the sufficient conditions provided to generate this outcome, efficiency will be restored in the optimal auction. (JEL Classification: D44, D82)

Type
Articles
Information
Journal of Wine Economics , Volume 4 , Issue 2 , Winter 2009 , pp. 166 - 184
Copyright
Copyright © American Association of Wine Economists 2009

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