Nicola Doni and Domenico Menicucci
A buyer needs to procure a good from one of two suppliers offering differentiated products and with privately observed costs. The buyer privately observes the own valuations for the products and (ex ante) decides how much of this information should be revealed to suppliers before they play a first score auction. Our main result is that the more significant is each supplier’s private information on the own cost, the less information the buyer should reveal. We also examine the buyer’s incentives to make untruthful announces.