- Information acquisition and pre-emptive bidding
- Number of pages
- onbekend: Afdeling Algemene Economie
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
We study an auction setting with two bidders one of whom is better informed regarding the realization of a common value component of the object on sale. The bidder with the ex-ante coarser information can become as well informed as the initially advantaged bidder, but at a cost. We analyze the incentives to place a pre-emptive bid that discourages information acquisition and show how such incentives vary with the relative size of the common component and on whether the informed bidder knows how her value decomposes into a private and a common value part or not. We also evaluate the effects of a jump bid on the auction's revenue and efficiency.
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