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Bank of Finland Research Discussion Papers, Bank of Finland

No 8/2012:
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 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)

22 pages, February 14, 2012

Earlier version BoF DP 7/2010.

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