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Price Reveal Auctions

Author

Listed:
  • Andrea Gallice

Abstract

A price reveal auction (PRA) is a descending price auction in which the current price of the item on sale is hidden. Buyers can privately observe the price only by paying a fee, and every time an agent does so, the price falls by a predetermined amount. We show that if the number of participants, n, is common knowledge, then in equilibrium a PRA replicates the outcome of a posted price mechanism. In particular, at most one buyer observes the price and the auction immediately ?nishes. In contrast, multiple entries can occur and pro?tability is enhanced when agents are uncertain about n. Under some conditions, a PRA may even yield higher expected revenues than standard auction formats.

Suggested Citation

  • Andrea Gallice, 2015. "Price Reveal Auctions," Carlo Alberto Notebooks 437, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:437
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    File URL: https://www.carloalberto.org/wp-content/uploads/2018/11/no.437.pdf
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    Other versions of this item:

    • Andrea Gallice, 2012. "Price Reveal Auctions," Working papers 015, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.

    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 21:46:00

    Citations

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    Cited by:

    1. Andrea Gallice & Giuseppe Sorrenti, 2022. "Curious about the price? Consumers’ behavior in price reveal auctions," Applied Economics Letters, Taylor & Francis Journals, vol. 29(9), pages 831-834, May.
    2. Hinnosaar, Toomas, 2016. "Penny auctions," International Journal of Industrial Organization, Elsevier, vol. 48(C), pages 59-87.
    3. Toomas Hinnosaar, 2013. "Penny Auctions are Unpredictable," Carlo Alberto Notebooks 305, Collegio Carlo Alberto.

    More about this item

    Keywords

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    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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