11 research outputs found
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Auction Equilibrium with Costly Information Acquisition
This paper presents a simple model of auction equilibrium. The distinctive feature of the model is that each bidder may discover the value that the item represents for herself, provided she spends some amount in order to be well informed. For each agent, the decision of whether or not to acquire information depends on a private cost of information acquisition and on her conjectures regarding the behavior of other bidders. A rational expectations equilibrium is characterized
Bidding Behavior under Costly Information Acquistion: An Experimental Study, Working Paper in Economics #17-95
This paper presents the results of an experiment on the economics of endogenous information acquisition. The experiment consists of a series of auctions where subjects compete for an object with private but unknown value. The information regarding the value of the object is costly. The experiment tests a theoretical model of bidding equilibrium and analyzes the effects of variations in the parameters (such as information costs and level of uncertainty) on the endogenous variables (such as the proportion of bidders who buy information and the winning bid). Bidders β decisions concerning the purchase of information are closely consistent with a Risk Neutral Rational Expectations model. The winning bids, however, are persistently above the equilibrium predictions suggesting the presence of risk aversion
HYPOTHETICAL BIAS IN PRIVATE VALUE AUCTIONS WITH COSTLY INFORMATION ACQUISITION*
auction, information acquisitio