Reserve Prices in Auctions with Entry when the Seller in Risk Averse

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dc.contributor.author Moreno Ruiz, Diego
dc.contributor.author Wooders, John
dc.contributor.editor Universidad Carlos III de Madrid. Departamento de Economía
dc.date.accessioned 2016-12-14T13:47:12Z
dc.date.available 2016-12-14T13:47:12Z
dc.date.issued 2016-12
dc.identifier.issn 2340-5031
dc.identifier.uri http://hdl.handle.net/10016/23951
dc.description.abstract We study optimal public and secret reserve prices for risk averse sellers in second price auctions with endogenous entry. We show that an optimal public reserve price rP (observed by buyers prior to making their entry decisions) is above the seller's cost, c, whereas the secret reserve price rS (observed by buyers only upon entering the auction) is below the revenue maximizing reserve price r0. Thus, risk aversion raises public reserve prices, but lowers secret reserve prices. Further, we show that an optimal public reserve price is smaller than the secret reserve price (i.e., rP < rS). Hence, for a risk averse seller public and secret reserve prices are ordered: c < rP < rS < r0.
dc.description.sponsorship Moreno gratefully acknowledges financial support from the Ministerio Economía y Competitividad (Spain), grants ECO2014-55953-P and MDM2014-0431, and from Comunidad de Madrid, grant S2015/HUM-3444. Wooders is grateful for financial support from the Australian Research Council’s Discovery Projects funding scheme (Project Number DP140103566).
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries UC3M working papers. Economics
dc.relation.ispartofseries 16-19
dc.relation.hasversion http://hdl.handle.net/10016/25137
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.other Second-price auctions
dc.subject.other Endogenous entry
dc.subject.other Public and secret reserve prices
dc.subject.other Risk Aversion
dc.title Reserve Prices in Auctions with Entry when the Seller in Risk Averse
dc.type workingPaper
dc.subject.jel D44
dc.rights.accessRights openAccess
dc.relation.projectID Gobierno de España. ECO2014-55953-P
dc.relation.projectID Gobierno de España. MDM2014-0431
dc.relation.projectID Comunidad de Madrid. S2015/HUM-3444/MADECO-CM
dc.type.version draft
dc.identifier.uxxi DT/0000001495
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