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On absolute auctions and secret reserve prices

Author

Listed:
  • Philippe Jehiel

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Laurent Lamy

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

From a theory viewpoint, the use of auctions with zero public reserve prices, also called absolute auctions, or of auctions with secret reserve prices, is somewhat puzzling despite being common. By allowing that buyers differ in their processing of past data regarding how the participation rate varies with the auction format and how reserve prices are distributed when secret, we show in a competitive environment that these auction formats may endogenously emerge. We also analyze how buyers with various sophistications and sellers with various costs sort into the different formats, thereby offering a range of testable predictions. Alternative approaches are reviewed.

Suggested Citation

  • Philippe Jehiel & Laurent Lamy, 2015. "On absolute auctions and secret reserve prices," Post-Print halshs-01155875, HAL.
    • Handle: RePEc:hal:journl:halshs-01155875
    DOI: 10.1111/1756-2171.12085
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    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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    Cited by:

    1. Onur A. Koska & Frank Stähler, 2022. "Reserve Prices as Signals," Working Papers in Economics 22/10, University of Canterbury, Department of Economics and Finance.
    2. Balzer, Benjamin & Rosato, Antonio, 2025. "Never say never: Optimal exclusion and reserve prices with expectations-based loss-averse buyers," Journal of Economic Theory, Elsevier, vol. 228(C).
    3. Philippe Jehiel, 2022. "Analogy-Based Expectation Equilibrium and Related Concepts:Theory, Applications, and Beyond," Working Papers halshs-03735680, HAL.
    4. Onur A. Koska & Frank Stähler, 2017. "When should bidders learn reserve prices?," ERC Working Papers 1712, ERC - Economic Research Center, Middle East Technical University, revised Oct 2017.
    5. Suzdaltsev, Alex, 2022. "Distributionally robust pricing in independent private value auctions," Journal of Economic Theory, Elsevier, vol. 206(C).
    6. Pasha Andreyanov & El Hadi Caoui, 2022. "Secret reserve prices by uninformed sellers," Quantitative Economics, Econometric Society, vol. 13(3), pages 1203-1256, July.
    7. repec:spo:wpmain:info:hdl:2441/4mmob120cl8g9ph8aisjq72u3h is not listed on IDEAS
    8. Brisset, Karine & Cochard, François & Le Gallo, Julie, 2015. "Secret versus public reserve price in an “outcry” English procurement auction: Experimental results," International Journal of Production Economics, Elsevier, vol. 169(C), pages 285-298.
    9. Kazumura, Tomoya & Mishra, Debasis & Serizawa, Shigehiro, 2020. "Strategy-proof multi-object mechanism design: Ex-post revenue maximization with non-quasilinear preferences," Journal of Economic Theory, Elsevier, vol. 188(C).
    10. Tristan Gagnon-Bartsch & Marco Pagnozzi & Antonio Rosato, 2021. "Projection of Private Values in Auctions," American Economic Review, American Economic Association, vol. 111(10), pages 3256-3298, October.
    11. Marleen Marra, 2024. "Estimating and Auction Platform Game with Two-Sided Entry," Sciences Po Economics Publications (main) hal-03393068, HAL.
    12. Lovo, Stefano & Spaenjers, Christophe, 2017. "No-trade in second-price auctions with entry costs and secret reserve prices," Economics Letters, Elsevier, vol. 156(C), pages 142-144.
    13. Guillaume Plantin & Jean Tirole, 2018. "Marking to Market versus Taking to Market," American Economic Review, American Economic Association, vol. 108(8), pages 2246-2276, August.
    14. Audrey Hu & Steven A Matthews & Liang Zou, 2019. "Low Reserve Prices in Auctions," The Economic Journal, Royal Economic Society, vol. 129(622), pages 2563-2580.
    15. Eda Gülşen & Erdal Özmen, 2017. "Monetary Policy Trilemma, Inflation Targeting And Global Financial Crisis," ERC Working Papers 1714, ERC - Economic Research Center, Middle East Technical University, revised Nov 2017.
    16. Philippe Jehiel & Laurent Lamy, 2015. "On absolute auctions and secret reserve prices," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 241-270, June.

    More about this item

    Keywords

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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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