The role of information in auctions (Q6615360)

This review discusses two influential papers on common-value auctions [\textit{R. Engelbrecht-Wiggans} et al., J. Math. Econ. 11, 161--169 (1983; Zbl 0511.90021); \textit{P. Milgrom} and \textit{R. J. Weber}, J. Math. Econ. 10, 105--114 (1982; Zbl 0481.90052)] that appeared in the \textit{Journal of Mathematical Economics}, which made early contributions to the economic analysis of auctions.\N\NThe authors describe the results in these papers and present several extensions. It is well known that a large part of the earlier literature on auctions assumes the information environment as exogenous. The extensions that the authors present demonstrate how the insights of R. Engelbrecht-Wiggans et al. [loc. cit] and P. Milgrom and R. J. Weber [loc. cit.] apply to the more recent literature on flexible information acquisition in auctions where the information structure is endogenously determined in equilibrium (see Theorem 2).