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A note on reserve price commitments in the Vickrey auction

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Author Info
Glowicka, Ela
Beck, Jonathan

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Abstract

This note provides a simple explanation why sellers rarely set optimal reserve prices in one-shot auctions. In a standard sealed-bid second-price auction, bidders with private values do not bid truthfully if the seller cannot commit to her announced reserve price. Consequently, expected revenue may be lower than without the announcement of a reserve price.

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File URL: http://mpra.ub.uni-muenchen.de/6669/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6669.

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Date of creation: Aug 2006
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Handle: RePEc:pra:mprapa:6669

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Related research
Keywords: Vickrey auction reserve price commitment.

Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Simon Grant & Atsushi Kajii & Flavio Menezes & Matthew J. Ryan, 2006. "Auctions with options to re-auction," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 17-39. [Downloadable!] (restricted)
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  2. Blume, Andreas & Heidhues, Paul, 2004. "All equilibria of the Vickrey auction," Journal of Economic Theory, Elsevier, vol. 114(1), pages 170-177, January. [Downloadable!] (restricted)
  3. E. Wolfstetter, . "The Swiss UMTS Spectrum Auction Flop: Bad Luck or Bad Design?," Sonderforschungsbereich 373 2001-50, Humboldt Universitaet Berlin.
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This page was last updated on 2008-10-6.

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