RT Generic
T1 Reserve Prices in Auctions with Entry when the Seller in Risk Averse
A1 Moreno, Diego
A1 Wooders, John
A2 Universidad Carlos III de Madrid. Departamento de Economía, 
AB 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.
SN 2340-5031
YR 2016
FD 2016-12
LK https://hdl.handle.net/10016/23951
UL https://hdl.handle.net/10016/23951
LA eng
NO Moreno gratefully acknowledges financial support fromthe 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 ResearchCouncil’s Discovery Projects funding scheme (Project Number DP140103566).
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RD 1 sept. 2024