Equilibria in Second Price Auctions with Information Acquisition

Shengyu Li and Guoqiang Tian

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies equilibria in second price auctions with information acquisition in an independent private value setting. We focus on the existence and uniqueness of equilibrium in the information acquisition stage for both homogenous and heterogenous bidders. It is shown that, when the relative probability gain of information acquisition is increasing, there always exists an equilibrium and further it is symmetric and unique when bidders are homogenous. Moreover, we show that different type of bidders must choose different information levels, and further the advantaged groups with lower marginal information cost have stronger incentive to acquire information. An illustrative example with two bidders and Gaussian specification is presented to provide intuition and implications on equilibrium behavior of bidders.

Keywords: Second price auctions; information acquisition; heterogenous bidders; the existence and uniqueness of equilibrium (search for similar items in EconPapers)
JEL-codes: C70 D44 D82 (search for similar items in EconPapers)
Date: 2008-03
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:41210

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