Optimal selling mechanisms with costly information acquisition1

web.at.northwestern.edu/economics/zheng/. We consider auction environments where bidders must incur a cost to learn their valuations. The seller chooses a mechanism which indicates for each period, as a function of the bids in previous periods, which new potential buyers should be asked to bid; it must also induce buyers both to acquire and to reveal truthfully their valuations. We prove a very general “full extraction of the surplus ” result: the seller can obtain the same profit as if he had full control over the buyers ’ acquisi-tion of information and could have observed directly their valuations once they are informed. We also present appealing implementations of the optimal mechanism in special cases.