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How to Set Minimum Acceptable Bids, with an Application to Real Estate Auctions

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  • McAfee, R Preston
  • Quan, Daniel C
  • Vincent, Daniel R

Abstract

In a general auction model with affiliated signals, common components to valuations and endogenous entry, we compute the equilibrium bidding strategies and outcomes, and derive a lower bound on the optimal reserve price. This lower bound can be computed using data on past auctions combined with information about the subsequent sales prices of unsold goods. We illustrate how to compute the lower bound using data from real estate auctions. Copyright 2002 by Blackwell Publishing Ltd

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 50 (2002)
Issue (Month): 4 (December)
Pages: 391-416

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Handle: RePEc:bla:jindec:v:50:y:2002:i:4:p:391-416

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Cited by:
  1. Philip A. Haile & Elie Tamer, 2003. "Inference with an Incomplete Model of English Auctions," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 1-51, February.
  2. Vasiliki Skreta, 2010. "Optimal Auction Design under Non-Commitment," Levine's Working Paper Archive 506439000000000176, David K. Levine.
  3. Orley Ashenfelter & Kathryn Graddy, 2002. "Art Auctions: A Survey of Empirical Studies," NBER Working Papers 8997, National Bureau of Economic Research, Inc.
  4. Sudip Gupta, 2004. "Endogenous Asymmetry and Entry in Sequential Multi-Unit Auctions: Identification and Estimation," Econometric Society 2004 North American Summer Meetings 566, Econometric Society.
  5. Michael Peters, 1996. "Competition Among Mechanism Designers in a Common Value Environment," Working Papers peters-96-01, University of Toronto, Department of Economics.
  6. Tong Li & Xiaoyong Zheng, 2006. "Entry and competition effects in first-price auctions: theory and evidence from procurement auctions," CeMMAP working papers CWP13/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  7. Orley Ashenfelter & Kathryn Graddy, 2003. "Auctions and the Price of Art," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 763-787, September.
  8. Daley, Brendan & Schwarz, Michael & Sonin, Konstantin, 2012. "Efficient investment in a dynamic auction environment," Games and Economic Behavior, Elsevier, vol. 75(1), pages 104-119.
  9. Tong Li, 2005. "Econometrics of first-price auctions with entry and binding reservation prices," Journal of Econometrics, Elsevier, vol. 126(1), pages 173-200, May.
  10. Haile,P.A., 1999. "Auctions with resale," Working papers 33, Wisconsin Madison - Social Systems.
  11. Takako Idee & Shinichiro Iwata & Teruyuki Taguchi, 2008. "Auction Price Formation with Costly Occupants: Evidence Using Data from the Osaka District Court," CIRJE F-Series CIRJE-F-593, CIRJE, Faculty of Economics, University of Tokyo.
  12. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.

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