Reserve Price When Bidders are Asymmetric

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThe authors analyze the optimal reserve price in a second price auction when there are N types of bidders whose valuations are drawn from different distribution functions. The seller cannot determine the specific type of each bidder. First, the authors show that the number of bidders affects the reserve price. Second, they give the sufficient conditions for the uniqueness of the optimal reserve price. Third, the authors find that if a bidder is replaced by a stronger bidder, the optimal reserve price may decrease. Finally, they give sufficient conditions that ensure the seller will not use a reserve price; hence, the auction will be efficient. JEL D44

Basic auction theory revisited

“…They too provide sufficient conditions under which the optimal reserve price is zero. In Appendix A we demonstrate that our sufficient conditions (in Proposition 7) are slightly weaker than the sufficient conditions required in Gunay et al (2012).…”

“…In Appendix A we demonstrate that our sufficient conditions (in Proposition 7) are slightly weaker than the sufficient conditions required in Gunay et al . ().…”

“…In a recent paper, Gunay et al . () analyze reserve prices when bidders are asymmetric. They too provide sufficient conditions under which the optimal reserve price is zero.…”

“…In the standard literature sufficient conditions are provided for the optimal reserve price to be zero. In a recent paper, Gunay et al (2012) analyze reserve prices when bidders are asymmetric. They too provide sufficient conditions under which the optimal reserve price is zero.…”

Common‐value auctions with asymmetrically informed bidders and reserve price

“…Levin and Smith () and Gunay, Meng, and Nagelberg () have also shown the possibility of zero optimal reserve price.…”