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A note on reserve price commitments in the Vickrey auction


  • Glowicka, Ela
  • Beck, Jonathan


This note provides a simple explanation why sellers rarely set optimal reserve prices in one-shot auctions. In a standard sealed-bid second-price auction, bidders with private values do not bid truthfully if the seller cannot commit to her announced reserve price. Consequently, expected revenue may be lower than without the announcement of a reserve price.

Suggested Citation

  • Glowicka, Ela & Beck, Jonathan, 2006. "A note on reserve price commitments in the Vickrey auction," MPRA Paper 6669, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6669

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    References listed on IDEAS

    1. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    2. Elmar G. Wolfstetter, 2001. "The Swiss UMTS Spectrum Auction Flop: Bad Luck or Bad Design," CESifo Working Paper Series 534, CESifo Group Munich.
    3. Blume, Andreas & Heidhues, Paul, 2004. "All equilibria of the Vickrey auction," Journal of Economic Theory, Elsevier, vol. 114(1), pages 170-177, January.
    4. Simon Grant & Atsushi Kajii & Flavio Menezes & Matthew J. Ryan, 2006. "Auctions with options to re-auction," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 17-39.
    5. Menezes, Flavio & Ryan, Matthew J., 2005. "Reserve price commitments in auctions," Economics Letters, Elsevier, vol. 87(1), pages 35-39, April.
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    More about this item


    Vickrey auction; reserve price; commitment;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design


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