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A Note on Buyers’ Behavior in Auctions with an Outside Option

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  • Alexander Maslov

    (Department of Economics, Finance and Quantitative Analysis, Kennesaw State University, 560 Parliament Garden Way, Kennesaw, GA 30144, USA)

Abstract

In this note I show that the equilibrium in cutoff strategies observed in auctions with a buy-it-now price may also arise in markets where objects are sold simultaneously by auctions and posted prices. However, contrary to auctions with a buy-it-now price where buyers need to know only the total number of players in the market, in the latter environment buyers must also observe the number of active bidders in the auction for the equilibrium to exist in cutoff strategies.

Suggested Citation

  • Alexander Maslov, 2020. "A Note on Buyers’ Behavior in Auctions with an Outside Option," Games, MDPI, vol. 11(3), pages 1-9, July.
    • Handle: RePEc:gam:jgames:v:11:y:2020:i:3:p:26-:d:386433
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    References listed on IDEAS

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    1. Stanley Reynolds & John Wooders, 2009. "Auctions with a buy price," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 9-39, January.
    2. Anwar, Sajid & Zheng, Mingli, 2015. "Posted price selling and online auctions," Games and Economic Behavior, Elsevier, vol. 90(C), pages 81-92.
    3. Jong-Rong Chen & Kong-Pin Chen & Chien-Fu Chou & Ching-I Huang, 2013. "A Dynamic Model of Auctions with Buy-It-Now: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 61(2), pages 393-429, June.
    4. Hila Etzion & Edieal Pinker & Abraham Seidmann, 2006. "Analyzing the Simultaneous Use of Auctions and Posted Prices for Online Selling," Manufacturing & Service Operations Management, INFORMS, vol. 8(1), pages 68-91, March.
    5. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    6. Timothy Mathews & Brett Katzman, 2006. "The role of varying risk attitudes in an auction with a buyout option," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(3), pages 597-613, April.
    7. Sun, Daewon, 2008. "Dual mechanism for an online retailer," European Journal of Operational Research, Elsevier, vol. 187(3), pages 903-921, June.
    8. René Caldentey & Gustavo Vulcano, 2007. "Online Auction and List Price Revenue Management," Management Science, INFORMS, vol. 53(5), pages 795-813, May.
    9. Hummel, Patrick, 2015. "Simultaneous use of auctions and posted prices," European Economic Review, Elsevier, vol. 78(C), pages 269-284.
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    Cited by:

    1. Caio Waisman, 2021. "Selling mechanisms for perishable goods: An empirical analysis of an online resale market for event tickets," Quantitative Marketing and Economics (QME), Springer, vol. 19(2), pages 127-178, June.
    2. Alexander Maslov, 2023. "Auctions versus posted prices in the revenue management of limited inventory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(3), pages 1476-1490, April.
    3. Alexander Maslov, 2022. "Competition in online markets with auctions and posted prices," Journal of Economics, Springer, vol. 137(2), pages 145-169, October.

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