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Secret Reserve Prices in a Bidding Model with a Re-Sale Option

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  • Horstmann, I.J.
  • LaCasse, C.

Abstract

This paper presents an auction model in which the seller may choose not to sell in spite of receiving a bid above the announced reserve price. Such behavior is seen frequently in auctions, yet would be suboptimal within most existing models. Here, the seller uses resale to signal information about the object's value that could not be easily communicated via a reserve price announcement. The model predicts that bids for reauctioned objects increase relative to initial bids and that, on average, prices of both reauctioned items and those sold at initial auction rise as delay in reauctioning increases. Copyright 1997 by American Economic Association.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Horstmann, I.J. & LaCasse, C., 1995. "Secret Reserve Prices in a Bidding Model with a Re-Sale Option," Working Papers 9507e, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:9507e
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    Keywords

    AUCTIONS; PRICING; INFORMATION;

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