An efficient dynamic mechanism with covert information acquisition

Vitali Gretschko and Jasmina Simon

No 24-081, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

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 rst-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-eciency. 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)
Date: 2024
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