Publication: Information Acquisition in Auctions: Sealed Bids vs. Open Bids
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2006
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Abstract
This paper studies the incentives of a bidder to acquire information in an auction when her information acquisition decision is observed by the other bidders before they bid. Our results show that the sealed bid (second price) auction induces more information acquisition about a common component of the value than the open (English) auction, but less about the private component of the value. Moreover, under our assumptions more information about the private value and less information about the common value improves efficiency and revenue in some sense. Consequently, our results suggest new arguments in favor of the open auction.
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Auctions, Open information acquisition, Asymmetric information