Work

On absolute auctions and secret reserve prices

Year: 2015

Type: article

Abstract: From a theory viewpoint, the use of auctions with zero public reserve prices, also called absolute auctions, or of auctions with secret reserve prices, is somewhat puzzling despite being common. By allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret, we show in a competitive environment that these auction formats may endogenously emerge. We also analyze how buyers with various sophistications and sellers with various costs sort into the different formats, thereby offering a range of testable predictions. Alternative approaches are reviewed.

Source: The RAND Journal of Economics

DOI: 10.1111/1756-2171.12085

Authors: Philippe Jehiel, Laurent Lamy

Institutions: École nationale des ponts et chaussées, University College London, Paris School of Economics

Language: English

Topic: Auction Theory and Applications

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

Open Access status: green

Funder: European Research Council

OpenAlex ID: W2248930265

FWCI: 3.735

Cites: 54

Cited by: 25

Related to: 10