Experimental Economics

, Volume 18, Issue 3, pp 335–355 | Cite as

Excess information acquisition in auctions

  • Vitali GretschkoEmail author
  • Alexander Rajko
Original Paper


The acquisition of information is an important feature in most auctions where one’s exact private valuation is unknown ex-ante. We conducted the first experiment in testing a risk-neutral expected surplus maximization model with this feature. Varying the auction format and the cost of information acquisition we found bidders in most cases acquired too much information. Moreover, bidders who remained uninformed placed bids significantly below the optimal bid. The general prediction concerning revenue and efficiency remains valid, as a higher information cost was associated with lower revenues and efficiency rates. We explore different ex-post explanations for the observed behavior and show that regret avoidance can explain the data while risk aversion and ambiguity aversion cannot.


Dynamic auctions Information acquisition Bidding behavior 

JEL classification

C91 D44 D80 



We would like to thank Jennifer Brown, Jacob Goeree, Axel Ockenfels, Alexander Rasch, and Achim Wambach for their helpful comments and discussion. Financial support from the German Research Foundation through the research unit “Design & Behavior” (FOR 1371) and the Fulbright Commission is gratefully acknowledged. Substantial parts of this paper were written when the first author stayed at Yale University in 2011/2012. The author thanks the department of economics for its hospitality. We would also like to thank our two anonymous referees and the associate editor for their detailed and helpful comments that have greatly improved this paper. All remaining errors are our own.

Supplementary material

10683_2014_9406_MOESM1_ESM.pdf (322 kb)
Electronic Supplementary Material (PDF 322 kb)


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Copyright information

© Economic Science Association 2014

Authors and Affiliations

  1. 1.University of CologneCologneGermany

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