Low Reserve Prices in Auctions

Datos Bibliográficos

ID9717277
AutoresAudrey Hu (0000-0002-0498-9480, City University of Hong Kong), Steven A Matthews (University of Pennsylvania, autor de correspondencia), Liang Zou (0000-0002-7899-3108, University of Amsterdam)
Año2019
Volumen129
Número622
Páginas2563-2580
Fecha de publicación2019-08-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (PUBLISHER • GB)
DOI10.1093/ej/uez004
OpenAlexW2608467271
IdiomaEN
Referencias citadas27

A standard result in auction theory is that a seller’s profit-maximising reserve price is no less than his own value for the good. In practice, however, reserve prices often appear to be less than sellers’ values. This article revisits the theory of optimal reserves in the context of second-price auctions. The main result is that an optimal reserve is less than the seller’s value if the bidders are sufficiently risk averse and if their values are sufficiently interdependent. The resulting outcome may approximate that of an auction without reserve, i.e., an absolute auction

Auction theory · Common value auction · Context (archaeology · Dutch auction · Economics · English auction · Microeconomics · Outcome (game theory · Profit (economics · Reservation price · Revenue equivalence · Value (mathematics · Vickrey auction · Auction Theory and Applications · Consumer Market Behavior and Pricing · Experimental Behavioral Economics Studies · Mathematics