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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 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, 2013. "Information acquisition during a Dutch auction," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1213-1225.
    • Handle: RePEc:eee:jetheo:v:148:y:2013:i:3:p:1213-1225
    DOI: 10.1016/j.jet.2012.09.018
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    References listed on IDEAS

    as
    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. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    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. Miettinen, Paavo, 2012. "Information acquisition during a Dutch auction," Bank of Finland Research Discussion Papers 8/2012, Bank of Finland.
    6. Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-943, June.
    7. repec:zbw:bofrdp:2012_008 is not listed on IDEAS
    8. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    9. 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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    Citations

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    Cited by:

    1. Miettinen, Paavo, 2017. "Information acquisition during a descending price auction with asymmetrically informed players," Research Discussion Papers 5/2017, Bank of Finland.
    2. 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.
    3. Leonardo Rezende, 2018. "Mid-auction information acquisition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(3), pages 751-780, May.
    4. Li, Zhen & Yue, Jinfeng & Kuo, Ching-Chung, 2018. "Design of discrete Dutch auctions with consideration of time," European Journal of Operational Research, Elsevier, vol. 265(3), pages 1159-1171.
    5. repec:zbw:bofrdp:2017_005 is not listed on IDEAS
    6. Ninoslav Malekovic & Lazaros Goutas & Juliana Sutanto & Dennis Galletta, 2020. "Regret under different auction designs: the case of English and Dutch auctions," Electronic Markets, Springer;IIM University of St. Gallen, vol. 30(1), pages 151-161, March.
    7. Cerezo Sánchez, David, 2017. "An Optimal ICO Mechanism," MPRA Paper 81285, University Library of Munich, Germany.

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    More about this item

    Keywords

    Auctions; Information acquisition; Revenue equivalence;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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