Efficient mechanisms with information acquisition

This paper studies the design of ex ante efficient mechanisms in environments where a single object is for sale, and agents have positively interdependent values and can covertly acquire information at some cost before participating in a mechanism. We find that ex ante efficient mechanisms discourage agents from acquiring excessive information by pooling or randomization. The optimal pooling regions are those where the semi-elasticity of information acquisition is large. There exists an ex ante efficient mechanism that can be implemented by standard auctions with restrictions on the set of allowable bids. In special cases, this implementation is simple and appealing: standard auctions with discrete bids. (C) 2019 Elsevier Inc. All rights reserved.