Abstract
This note shows by means of an example that in a common-value auction a seller with a random reservation value can increase her ex ante expected profits by following a policy of conducting an auction in which her reserve price is kept secret compared to an auction in which the reserve price is announced. By keeping the reserve price secret, the seller is able to encourage greater participation from the bidders and can, therefore, increase the linkage of the price paid to the value of the purchased object. Journal of Economic Literature Classification Numbers: D82, D44.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
