Auctions with costly information acquisition Constrained Bidders

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Auctions with costly information acquisition Constrained Bidders

Author Info

Jacques Cremer
Yossi Spiegel
Charles Z. Zheng

Additional information is available for the following registered author(s):

Jacques Crémer

Abstract

We consider auction environments in which bidders must incur a cost to learn their valuations and study the optimal selling mechanisms in such environments. These mechanisms specify for each period, as a function of the bids in previous periods, which new potential buyers should be asked to bid. In addition, these mechanisms must induce buyers to both acquire and to reveal truthfully their valuations. Using a generalized Groves principle, we prove a very general “full extraction of the surplus” result: the seller can obtain the same profit as if he had full control over the buyers’ acquisition of information and could have observed directly their valuations once they are informed. We also present appealing implementations of the optimal mechanism in special cases.

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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1420.

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Date of creation: May 2004
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Handle: RePEc:nwu:cmsems:1420

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This paper has been announced in the following NEP Reports:

NEP-ALL-2007-04-09 (All new papers)
NEP-GTH-2007-04-09 (Game Theory)

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Other versions:
- Khalil, F & Rochet, J-C, 1997. "Strategic Information Gathering Before a Contract is Offered," Discussion Papers in Economics at the University of Washington 97-15, Department of Economics at the University of Washington.
- Khalil, F & Rochet, J-C, 1997. "Strategic Information Gathering Before a Contract is Offered," Working Papers 97-15, University of Washington, Department of Economics.
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Other versions:
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Other versions:
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Other versions:
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Other versions:
- CRÉMER, Jacques & KHALIL, Fahad, 1991. "Gathering Information before Signing a Contract," IDEI Working Papers 5, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
- Cremer, J. & Khalil, F., 1991. "Gathering Information Before Signing a Contract," Working Papers 91-16, University of Washington, Department of Economics.
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