Information acquisition in auctions: Sealed bids vs. open bids

This paper studies the incentives of a bidder to acquire information in an auction when her information acquisition decision is observed by the other bidders before they bid. Our results show that the incentives are stronger in a sealed bid (second price) auction than in an open (English) auction when the information acquired refers to a common component of the value. However, the ranking is the opposite when the information acquired refers to a private component of the value, at least for a large number of bidders. Our results seem to be due to differences on the strength of the winner’s curse, although a more careful analysis show that the key force is rather the loser’s curse. JEL Classification Numbers: D41, D44, D82.