Economic Theory

, Volume 55, Issue 3, pp 731–751

Information acquisition during a descending auction

Research Article

DOI: 10.1007/s00199-013-0766-y

Cite this article as:
Gretschko, V. & Wambach, A. Econ Theory (2014) 55: 731. doi:10.1007/s00199-013-0766-y

Abstract

We compare the effects of information acquisition during a descending auction with its static counterpart, the first-price sealed-bid auction. In a framework with heterogeneous prior information, we show that an equilibrium with information acquisition exists in both auction formats. We show that everything else equal information acquisition is more desirable in the dynamic auction. Moreover, we characterize a set of parameter values where more information is acquired in the dynamic auction in equilibrium. If the costs of information acquisition are sufficiently low, the sealed-bid auction generates more revenue although the descending auction is more efficient.

Keywords

Descending auction Dutch auction First-price sealed-bid auction Information acquisition 

JEL Classification

D44 D82 D83 

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.University of CologneCologneGermany

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