A note on reserve price commitments in the Vickrey auction
AbstractThis 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6669.
Date of creation: Aug 2006
Date of revision:
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; Mechanism Design
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.:
- Grant, S. & Kajii, A. & Menezes, F. & Ryan, M., 2002.
"Auctions with Options to Re-auction,"
2002-55, Tilburg University, Center for Economic Research.
- Blume, Andreas & Heidhues, Paul, 2004. "All equilibria of the Vickrey auction," Journal of Economic Theory, Elsevier, vol. 114(1), pages 170-177, January.
- Menezes, Flavio & Ryan, Matthew J., 2005. "Reserve price commitments in auctions," Economics Letters, Elsevier, vol. 87(1), pages 35-39, April.
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