Efficient Mechanisms with Information Acquisition

This paper studies the design of ex ante efficient mechanisms in situations 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 ?nd that when the strength of interdependence is low or the number of agents is large, the ex post efficient mechanism is also ex ante efficient. In cases of high interdependence or a small number of agents, ex ante efficient mechanisms discourage agents from acquiring excessive information by introducing randomization to the ex post efficient allocation rule in areas where the information’s accuracy increases most rapidly if an addition piece of information is acquired. In special cases, there exists an ex ante efficient mechanism that has a simple and appealing implementation: standard auctions with discrete bids.