Endogenous Information Acquisition on Opponents' Valuations in Multidimensional First Price Auctions

Guoqiang Tian and Mingjun Xiao

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates bidder's covert behavior of endogenous information acquisition on her opponents' valuations in first price auction model with independent private values. Such an information acquisition setting leads to bidimensional type space and bidimensional strategy space. We consider two different specifications of the environments: the ex ante information acquisition setting and the interim information acquisition setting. In equilibria the expected payoffs of the bidder under these specifications could exceed the counterpart payoffs of the corresponding standard sealed-bid auctions without information acquisition as long as the cost is small, but the auctioneer has lower payoffs in these models than those of the standard ones. Moreover, the incurred information cost becomes the deadweight loss, resulting in ine±cient outcomes.

Keywords: First-price sealed-bid auctions; endogenous information acquisition; opponents' valuation; profitability (search for similar items in EconPapers)
JEL-codes: C70 D44 D82 (search for similar items in EconPapers)
Date: 2007-09, Revised 2010-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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