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Auctions with flexible information acquisition

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  • Kim, Kyungmin
  • Koh, Youngwoo

Abstract

We consider independent private value auctions in which prior to bidding, each bidder engages in fully flexible information acquisition, choosing not only how much information but also what information to acquire about his value. Focusing on a tractable environment with binary underlying values and posterior-separable information costs, we characterize the unique symmetric equilibrium and investigate the effects of information costs on auction outcomes. We also analyze how the reserve price influences bidders' information-acquisition behavior and study its implications for the seller's expected revenue.

Suggested Citation

  • Kim, Kyungmin & Koh, Youngwoo, 2022. "Auctions with flexible information acquisition," Games and Economic Behavior, Elsevier, vol. 133(C), pages 256-281.
    • Handle: RePEc:eee:gamebe:v:133:y:2022:i:c:p:256-281
    DOI: 10.1016/j.geb.2022.03.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Information acquisition; Auctions; Posterior-separable information costs; Concavification;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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