Auctions with costly information acquisition

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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Year of publication:	2004
Authors:	Crémer, Jacques ; Spiegel, Yossi
Publisher:	Evanston : Northwestern Univ., Kellogg Graduate School of Management, Center for Mathematical Studies in Economics and Management Science
Subject:	Auktionstheorie \| Informationskosten \| Adverse Selection \| Mechanism Design

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Series:	Discussion paper // Center for Mathematical Studies in Economics and Management Science ; 1420
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	587462965 [GVK] hdl:10419/31245 [Handle]
Source:	EconStor