On the Revelation of Provenance in Online Wine Auctions
Lester M.K. Kwong
Journal of Wine Economics, Vol. 4, No. 2, 166-184
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)