Reserve Prices in Auctions as Reference Points

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 AbstractWe consider second-price and first-price auctions in the symmetric independent private values framework. We modify the standard model by the assumption that the bidders have reference-based utility, where a publicly announced reserve price has some influence on the reference point. It turns out that the seller's optimal reserve price is increasing in the number of bidders. Also in contrast to the standard model, we find that secret reserve prices can outperform public reserve prices, and that setting the optimal reserve price can be more valuable for the seller than attracting additional bidders.

Behavioral Contract Theory

“…26 Another possibility explored by researchers is that the reference point of auction participants is partially determined by the reserve price. In particular, Rosenkranz and Schmitz (2007) specify the reference point in money as a weighted average of the reserve price and an exogenous parameter, so that an increase in the reserve price directly raises bidders' willingness to pay, and hence their bids. When either the number of bidders or the exogenous component of the reference point is high, the bid-raising benefit of increasing the reserve price dwarfs the cost from the increased risk of not being able to sell, and therefore even a small degree of loss aversion can lead to a significant increase in the optimal reserve price.…”

Empirical Evidence on the Impact of Reserve Prices in English Auctions

“…Clearly, exploring in more detail the underlying rationale for these results is a crucial next step in our analysis. For instance, and building on Trautmann and Traxler's [] work, our database can be used to analyze the possibility that reserve prices are used as reference points, as predicted by Rosenkranz and Schmitz []. It can also be used to further explore the issue of how (and why) sellers set their reserve prices in HT auctions, e.g., building on the work of Englmaier and Schmöller [2008b] and Davis et al .…”

Críticas à teoria da escolha racional e hierarquias de conhecimento na ciência política

“…Além disso, em uma segunda versão de sua teoriateoria prospectiva cumulativa -, Kahneman e Tversky (2000) afirmam que o processo de decisão é essencialmente construtivo e contingente, mas não necessariamente racional devido aos efeitos de framing. As aplicações da teoria prospectiva no mundo real podem ser encontradas nos mercados de ações (BARBERIS; HUANG; THALER, 2006; BENARTZI; THALER, 1995) e leilões (ROSENKRANZ; SCHMITZ, 2007).…”