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Information acquisition in auctions: Sealed bids vs. open bids

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  • Hernando-Veciana, Ángel

Abstract

This paper studies the incentives of a bidder to acquire information in an auction when her information acquisition decision is observed by the other bidders before bidding. Our results show that the sealed bid (second price) auction may induce more information acquisition about a common component of the value than the open (English) auction but less about the private component of the value. Moreover, we show that more information about the private value and less information about the common value may improve efficiency and revenue. Consequently, our results suggest new arguments in favor of the open auction.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 65 (2009)
Issue (Month): 2 (March)
Pages: 372-405

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Handle: RePEc:eee:gamebe:v:65:y:2009:i:2:p:372-405

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Auctions Open information acquisition Asymmetric information;

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References

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  18. Angel Hernando-Veciana & Michael Tröge, 2005. "The Insider's Curse," Microeconomics 0503012, EconWPA.
  19. Krishna, Vijay, 2003. "Asymmetric English auctions," Journal of Economic Theory, Elsevier, vol. 112(2), pages 261-288, October.
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Citations

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Cited by:
  1. Florian Morath, 2011. "Volunteering and the Strategic Value of Ignorance," CESifo Working Paper Series 3419, CESifo Group Munich.
  2. Angel Hernando-Veciana & Michael Tröge, 2005. "The Insider's Curse," Microeconomics 0503012, EconWPA.
  3. Florian Morath & Johannes Münster, 2013. "Information acquisition in conflicts," Economic Theory, Springer, vol. 54(1), pages 99-129, September.
  4. Florian Morath, 2013. "Volunteering and the strategic value of ignorance," Social Choice and Welfare, Springer, vol. 41(1), pages 99-131, June.
  5. Tri Vi Dang & Florian Morath, 2013. "The Taxation of Bilateral Trade with Endogenous Information," Working Papers tax-mpg-rps-2013-07, Max Planck Institute for Tax Law and Public Finance.

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