An Efficient Dynamic Mechanism with Covert Information Acquisition

Vitali Gretschko () and Jasmina Simon ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We examine a setting of independent private value auctions where bidders can covertly acquire gradual information about their valuations. We demonstrate that a dynamic pivot mechanism implements the first-best information acquisition and allocation rule. We apply our results to a commonly used model of auctions with information acquisition. The bidders are symmetric and information acquisition costs are moderate. Our analysis shows that the Dutch auction achieves near‐efficiency. That is, the welfare loss is bounded by the information acquisition cost of a single bidder. In contrast, the English auction may result in greater welfare losses.

Keywords: Information acquisition; dynamic auctions; dynamic pivot mechanism (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Pages: 27
Date: 2024-12
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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