Efficient mechanisms with information acquisition

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)279-329
Journal / PublicationJournal of Economic Theory
Volume182
Online published7 May 2019
Publication statusPublished - Jul 2019

Abstract

This paper studies the design of ex ante efficient mechanisms in environments where a single object is for sale, and agents have positively interdependent values and can covertly acquire information at some cost before participating in a mechanism. We find that ex ante efficient mechanisms discourage agents from acquiring excessive information by pooling or randomization. The optimal pooling regions are those where the semi-elasticity of information acquisition is large. There exists an ex ante efficient mechanism that can be implemented by standard auctions with restrictions on the set of allowable bids. In special cases, this implementation is simple and appealing: standard auctions with discrete bids.

Research Area(s)

  • Auctions, Mechanism Design, Information Acquisition, Efficiency