Auctioning with Aspirations: Keep Them Low (Enough)
AbstractIn an auction with a buy price, a seller offers bidders the opportunity to forgo competing in an auction by transacting immediately at a pre-specified fixed price. If a seller has aspirations in the form of a reference price that depends upon the auction's reserve price and buy price, she does best to keep her aspirations sufficiently low by designing a no-reserve auction with a buy price low enough that some bidder types would exercise it with positive probability in equilibrium. The seller is indifferent between the auction component of her mechanism being a first- or second-price auction.
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Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Alumni working papers with number 2009-02.
Length: 12 pages
Date of creation: Jul 2009
Date of revision:
Note: I would like to thank Lorenzo Garbo and Johannes Moenius for helpful suggestions.
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More information through EDIRC
Auction; Aspiration; Buy price; Internet; Reference-dependence;
Other versions of this item:
- Shunda, Nicholas, 2009. "Auctioning with Aspirations: Keep Them Low (Enough)," MPRA Paper 16242, University Library of Munich, Germany.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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