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Price Reveal Auctions

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Author Info

  • Andrea Gallice

    ()
    (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)

Abstract

A price reveal auction is a Dutch auction in which the current price of the item on sale remains hidden. Bidders can privately observe the price only by paying a fee, and every time a bidder does so, the price falls by a predetermined amount. We solve for the perfect Bayesian equilibria of the game. If the number of participants n is common knowledge, then in equilibrium at most one bidder observes the price and the profits that the mechanism raises, if any, are only marginally higher than those that would stem from a normal sale. If instead n is a random variable then multiple entry can occur and profitability is enhanced.

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File URL: http://eco83.econ.unito.it/RePEc/wp/m15.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino in its series Working papers with number 015.

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Length: 19 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:tur:wpapnw:015

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Related research

Keywords: pay-per-bid auctions; endogenous price decrease;

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References

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  1. J├╝rgen Eichberger & Dmitri Vinogradov, 2008. "Least Unmatched Price Auctions: A First Approach," Working Papers 0471, University of Heidelberg, Department of Economics, revised Jul 2008.
  2. Andrea Gallice, 2009. "Lowest Unique Bid Auctions with Signals," Carlo Alberto Notebooks 112, Collegio Carlo Alberto, revised Sep 2009.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Complicated auctions are more proftable
    by Economic Logician in Economic Logic on 2012-12-14 15:46:00
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Cited by:
  1. Toomas Hinnosaar, 2013. "Penny Auctions are Unpredictable," Carlo Alberto Notebooks 305, Collegio Carlo Alberto.

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