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Information acquisition during a Dutch auction

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  • Miettinen, Paavo

Abstract

In this paper we consider equilibrium behavior in a Dutch (descending price) auction when the bidders are uninformed of their valuations with probability q and can acquire information about their valuation with a positive cost during the auction. We assume that the information acquisition activity is covert. We characterize the equilibrium behavior in the setting where bidders are ex-ante symmetric and have independent private values. We show that when the number of bidders is large the Dutch auction produces more revenue than the first price auction.

Suggested Citation

  • Miettinen, Paavo, 2013. "Information acquisition during a Dutch auction," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1213-1225.
    • Handle: RePEc:eee:jetheo:v:148:y:2013:i:3:p:1213-1225
    DOI: 10.1016/j.jet.2012.09.018
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    References listed on IDEAS

    as
    1. Miettinen, Paavo, 2012. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 8/2012, Bank of Finland.
    2. repec:zbw:bofrdp:2012_008 is not listed on IDEAS
    3. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    4. Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-943, June.
    5. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, June.
    6. Dirk Bergemann & Juuso Valimaki, 2005. "Information in Mechanism Design," Cowles Foundation Discussion Papers 1532, Cowles Foundation for Research in Economics, Yale University.
    7. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    8. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-599, June.
    9. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Miettinen, Paavo, 2017. "Information acquisition during a descending price auction with asymmetrically informed players," Research Discussion Papers 5/2017, Bank of Finland.
    2. Miettinen, Paavo, 2017. "Information acquisition during a descending price auction with asymmetrically informed players," Bank of Finland Research Discussion Papers 5/2017, Bank of Finland.
    3. Leonardo Rezende, 2018. "Mid-auction information acquisition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 751-780, May.
    4. Li, Zhen & Yue, Jinfeng & Kuo, Ching-Chung, 2018. "Design of discrete Dutch auctions with consideration of time," European Journal of Operational Research, Elsevier, vol. 265(3), pages 1159-1171.
    5. repec:zbw:bofrdp:2017_005 is not listed on IDEAS
    6. Ninoslav Malekovic & Lazaros Goutas & Juliana Sutanto & Dennis Galletta, 2020. "Regret under different auction designs: the case of English and Dutch auctions," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(1), pages 151-161, March.
    7. Cerezo Sánchez, David, 2017. "An Optimal ICO Mechanism," MPRA Paper 81285, University Library of Munich, Germany.

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    More about this item

    Keywords

    Auctions; Information acquisition; Revenue equivalence;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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