Optimal Auctions with Information Acquisition

Xianwen Shi

Working Papers from University of Toronto, Department of Economics

Abstract: This paper studies optimal auction design in a private value setting with endogenous information acquisition. First, we develop a general framework for modeling information acquisition when a seller wants to sell an object to one of several potential buyers who can each gather information about their valuations prior to participation. We then show that under certain conditions, standard auctions with a reserve price remain optimal, but the optimal reserve price lies between the mean valuation and the standard reserve price in Myerson (1981). We provide sufficient conditions under which the value of information to the seller is positive, and also characterize the necessary and sufficient conditions under which equilibrium information acquisition in private value auctions is socially excessive. The key to the analysis is the insight that buyer incentives to acquire information become stronger as the reserve price moves toward the mean valuation.

Keywords: optimal auctions; information acquisition; rotation order; informational efficiency (search for similar items in EconPapers)
JEL-codes: C70 D44 D82 D86 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2007-12-03
New Economics Papers: this item is included in nep-gth and nep-mic
References: View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.economics.utoronto.ca/public/workingPapers/tecipa-302.pdf Main Text (application/pdf)

Related works:
Journal Article: Optimal auctions with information acquisition (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-302

Access Statistics for this paper

More papers in Working Papers from University of Toronto, Department of Economics 150 St. George Street, Toronto, Ontario.
Bibliographic data for series maintained by RePEc Maintainer ().