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Information Choice in Auctions

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  • Nina Bobkova

Abstract

The choice of an auction mechanism influences which object characteristics bidders learn about and whether the object is allocated efficiently. Some object characteristics are valued equally by all bidders and thus are inconsequential for the efficient allocation. Others matter only to certain bidders and thus determine the bidder with the highest valuation. I show when the second-price auction is ex ante efficient by inducing bidders to seek socially relevant information. When facing a continuous learning trade-off, bidders learn more about socially relevant components and less about common characteristics of the object in a second-price auction than a first-price auction.

Suggested Citation

  • Nina Bobkova, 2024. "Information Choice in Auctions," American Economic Review, American Economic Association, vol. 114(7), pages 1883-1915, July.
    • Handle: RePEc:aea:aecrev:v:114:y:2024:i:7:p:1883-1915
    DOI: 10.1257/aer.20221297
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    References listed on IDEAS

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    1. Jacob K. Goeree & Theo Offerman, 2003. "Competitive Bidding in Auctions with Private and Common Values," Economic Journal, Royal Economic Society, vol. 113(489), pages 598-613, July.
    2. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    3. Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-889, July.
    4. Matthew Jackson, 2009. "Non-existence of equilibrium in Vickrey, second-price, and English auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 13(1), pages 137-145, April.
    5. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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