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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 where the bidders are uninformed of their valuations with probability 1-q and can acquire information about their valuation at a positive cost during the auction. We assume that the information acquisition activity is covert. We characterize the equilibrium behavior in a setting where bidders are ex ante symmetric and have independent private values. We show that, if the number of bidders is large, the Dutch auction produces more revenue than would a first price auction.

Suggested Citation

  • Miettinen, Paavo, 2010. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 7/2010, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2010_007
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    References listed on IDEAS

    as
    1. Dirk Bergemann & Juuso Valimaki, 2005. "Information in Mechanism Design," Cowles Foundation Discussion Papers 1532R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2006.
    2. Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-943, June.
    3. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    4. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-599, June.
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    Cited by:

    1. Miettinen, Paavo, 2012. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 8/2012, Bank of Finland.
    2. Miettinen, Paavo, 2012. "Information acquisition during a Dutch auction," Research Discussion Papers 8/2012, Bank of Finland.
    3. repec:zbw:bofrdp:2012_008 is not listed on IDEAS

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