Auctions when bidders prepare by investing in ideas

Thomas Jeitschko and Elmar Wolfstetter

No 2000,18, SFB 373 Discussion Papers from Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes

Abstract: We consider auction games where, prior to the auction, bidders spend resources to increase their valuations. The market game is solved by solving an equivalent auxiliary social choice problem. We show that standard auctions are fully efficient, whereas reserve price requirements entail a double inefficiency. Moreover, we explain how optimal auctions differ from the well-known static optimum, and sketch the impact of information spillovers.

Keywords: auctions; procurement (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 1999
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Journal Article: Auctions when bidders prepare by investing in ideas (2000)
Working Paper: Auctions when Bidders Prepare by Investing in Ideas (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb373:200018

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