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Auction Equilibrium with Costly Information Acquisition

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Author Info
Rolando Guzman (University of California, Los Angeles)
Charles Kolstad (University of California, Santa Barbara)

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Abstract

This paper presents a simple model of auction equilibrium. The distinctive feature of the model is that each bidder may discover the value that the item represents for herself, provided she spends some amount in order to be well informed. For each agent, the decision of whether or not to acquire information depends on a private cost of information acquisition and on her conjectures regarding the behavior of other bidders. A rational expectations equilibrium is characterized.

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File URL: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1066&context=ucsbecon
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Publisher Info
Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number wp17-97.

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Date of creation: 01 Jan 1997
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Handle: RePEc:cdl:ucsbec:wp17-97

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Related research
Keywords: Auction; Equilibrium; Costly ; Information Acquisition;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June. [Downloadable!] (restricted)
  2. Lee, Tom K., 1985. "Competition and information acquisition in first price auctions," Economics Letters, Elsevier, vol. 18(2-3), pages 129-132. [Downloadable!] (restricted)
  3. Schweizer, Urs & von Ungern-Sternberg, Thomas, 1983. "Sealed Bid Auctions and the Search for Better Information," Economica, London School of Economics and Political Science, vol. 50(197), pages 79-85, February. [Downloadable!] (restricted)
  4. Wilson, Robert, 1992. "Strategic analysis of auctions," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 8, pages 227-279 Elsevier. [Downloadable!] (restricted)
  5. Maskin, Eric S & Riley, Joan G, 1985. "Auction Theory with Private Values," American Economic Review, American Economic Association, vol. 75(2), pages 150-55, May. [Downloadable!] (restricted)
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  6. Milgrom, Paul & Weber, Robert J., 1982. "The value of information in a sealed-bid auction," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 105-114, June. [Downloadable!] (restricted)
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  7. Engelbrecht-Wiggans, Richard & Milgrom, Paul R. & Weber, Robert J., 1983. "Competitive bidding and proprietary information," Journal of Mathematical Economics, Elsevier, vol. 11(2), pages 161-169, April. [Downloadable!] (restricted)
  8. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September. [Downloadable!] (restricted)
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  1. repec:bep:theadv:v:6:y:2006:i:1:p:1261-1261 is not listed on IDEAS
  2. Charles D. Kolstad Rolando M. Guzman, . "Information and the Divergence Between Willingness-to-accept and Willingness-to-pay," University of California at Santa Barbara, Economics Working Paper Series 30-98, Department of Economics, UC Santa Barbara. [Downloadable!]
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  3. Eric Rasmusen, 2004. "Strategic Implications of Uncertainty Over One’s Own Private Value in Auctions," Working Papers 2004-13, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
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