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Efficient Mechanisms with Information Acquisition

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  • Yunan Li

    () (Department of Economics and Finance, City University of Hong Kong)

Abstract

This paper studies the design of ex ante efficient mechanisms in situations where a single item is for sale, and agents have positively interdependent values and can covertly acquire information at a cost before participating in a mechanism. I find that when interdependency is low and/or the number of agents is large, the ex post efficient mechanism is also ex ante efficient. In cases of high interdependency and/or a small number of agents, ex ante efficient mechanisms discourage agents from acquiring excessive information by introducing randomization to the ex post efficient allocation rule in areas where the information’s precision increases most rapidly.

Suggested Citation

  • Yunan Li, 2017. "Efficient Mechanisms with Information Acquisition," PIER Working Paper Archive 16-007, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 23 Jun 2017.
  • Handle: RePEc:pen:papers:16-007
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    References listed on IDEAS

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    More about this item

    Keywords

    Auctions; Mechanism Design; Information Acquisition; Efficiency;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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