2010
7/2010
Information acquisition during a Dutch auction
Author(s): Paavo Miettinen
2010. 30 pages.
Publisher: Bank of Finland
ISBN 978-952-462-588-3 (Printed publication)
ISBN 978-952-462-589-0 (Web publication)
Search words: auctions, information acquisition, D44, D82, D83, Paavo Miettinen
In this paper we consider equilibrium behavior in a Dutch (descending price) auction where the bidders are uninformed of their valuations with probability 1-q and can acquire information about their valuation at a positive cost during the auction. We assume that the information acquisition activity is covert. We characterize the equilibrium behavior in a setting where bidders are ex ante symmetric and have independent private values. We show that, if the number of bidders is large, the Dutch auction produces more revenue than would a first price auction.