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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 that 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, 2012. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 8/2012, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp2012_008
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    References listed on IDEAS

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    1. 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.
    2. Miettinen, Paavo, 2010. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 7/2010, Bank of Finland.
    3. 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.
    4. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    5. repec:zbw:bofrdp:2010_007 is not listed on IDEAS
    6. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    7. 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, 2017. "Information acquisition during a descending price auction with asymmetrically informed players," Bank of Finland Research Discussion Papers 5/2017, Bank of Finland.
    2. Miettinen, Paavo, 2013. "Information acquisition during a Dutch auction," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1213-1225.

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