Learning rivals' information in interdependent value auctions

We study a simple auction model with interdependent values in which there are two bidders each of whom observes a binary signal and can learn rival's information at a cost, whereafter they compete in the first-price or second-price auction. We characterize a unique symmetric equilibrium strategy—learning and bidding strategies—for the two auction formats. In the first-price auction, bidders with high signal learn rival's information with higher...