We consider an auction environment with interdependent values. Each bidder can learn her payoﬀ type through costly information acquisition. We contrast the socially optimal decision to acquire information with the equilibrium solution in which each agent has to privately bear the cost of information acquisition. In the context of the generalized Vickrey-Clarke-Groves mechanism, we establish that the equilibrium level exceeds the socially optimal level of information with positive interdependence. The individual decisions to acquire information are strategic substitutes. The diﬀerence between the equilibrium and the eﬀicient level of information acquisition is increasing in the interdependence of the bidders’ valuations and decreasing in the number of informed bidders.
Bergemann, Dirk; Shi, Xianwen; and Välimäki, Juuso, "Information Acquisition in Interdependent Value Auctions" (2007). Cowles Foundation Discussion Papers. 1916.