Surplus extraction with rich type spaces

We characterize revenue maximizing mechanisms in auction settings with ‘rich’ type spaces, where bidders obtain information from sources other than their own valuation. By considering a relaxed problem, we provide an upper bound on revenue extraction that explicitly builds on the richness of the information structure. We provide a condition under which this upper bound is achieved and describe an optimal mechanism. Under this condition, we also show that the optimal revenue can be achieved through dominant strategy implementation.The optimal revenue result generalizes the full surplus extraction result of Cremer and McLean (1988) [5] as well as the standard independent private values revenue maximizing auction presented in Myerson (1981) [10], providing a unified treatment for two sets of results irreconcilable so far.