Information Acquisition and Efficient Mechanism Design

Abstract

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Do Firms Invest in Forecasting Efficiently? The Effect of Competition on Demand Forecast Investments and Supply Chain Coordination

“…The papers in this area regard information acquisition as hidden action, implying that the level of effort (investment) is unobservable to other players. Bergemann and Välimäki (2002) show that when agents have private valuations of a good and acquire costly independent information, a Vickrey-Clarke-Groves mechanism (VCG; see Clarke 1971, Groves 1973) achieves regret-free (or ex-post) efficient allocation and an ex-ante efficient level of information acquisition. Under common valuations and independent signals, efficient mechanism design is also examined in a group of studies, including Dasgupta and Maskin (2000), Jehiel and Moldovanu (2001), and Perry and Reny (2002).…”

The value of information for auctioneers

“…I allow for lotteries to rule out the possibility that indivisibilities drive the convexity results in Section 3. 7 Bergemann and Välimäki [4] provide several economically meaningful examples with common values and independently distributed private information.…”

“…The auctioneer is a residual claimant, since bidders are uninformed ex ante, and thus his problem is to economize on agents' entry costs. 4 Other papers include Matthews [32], who considers the endogenous accumulation of information in a pure common values auction, assuming special functional forms; Sobel [36], who has looked at a related problem, but with exogenous information; and Lewis and Sappington [30], who endogenize information acquisition and consider optimal organization design in a model with moral hazard.…”

“…The driving force in these papers is then the possible bidder's ignorance. Persico [34] and Bergemann and Välimäki [4] use an intermediate concept of information where precision can be increased continuously (based on Blackwell [6,7], Lehmann [28] and Athey and Levin [2]). Persico [34] compares the bidder's equilibrium incentives to acquire information in a first and second-price auction with affiliated values.…”

“…Bergemann and Välimäki [4] consider the distortions in the acquisition of information in efficient mechanisms.…”