Research Discussion Papers, Bank of Finland
No 7/2010:
Information acquisition during a Dutch auction
Paavo Miettinen ()
Abstract: In this paper we consider equilibrium behavior in a Dutch
(descending price) auction where the bidders are uninformed of their
valuations with probability 1-q and can acquire information about their
valuation at a positive cost during the auction. We assume that the
information acquisition activity is covert. We characterize the equilibrium
behavior in a setting where bidders are ex ante symmetric and have
independent private values. We show that, if the number of bidders is
large, the Dutch auction produces more revenue than would a first price
auction.
Keywords: auctions; information acquisition; (follow links to similar papers)
JEL-Codes: D44; D82; D83; (follow links to similar papers)
30 pages, February 22, 2010
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