IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v33y1987i6p763-770.html
   My bibliography  Save this article

On Optimal Reservation Prices in Auctions

Author

Listed:
  • Richard Engelbrecht-Wiggans

    (College of Commerce and Business Administration, University of Illinois, Champaign, Illinois 61820)

Abstract

The theory of auction design examines how various factors affect the outcome of an auction. Most of the existing literature focuses on how varying the amount of information available to each bidder affects the bid-taker's expected revenue when all other factors remain constant. This paper studies how the bid-taker's expected revenue varies with changes in the auction format when such changes affect the number of bidders, and, in turn, the bidders' maximum value for the object being sold. Specifically, we examine how varying the reservation price or screening level affects the bid-taker's expected revenue though its effect on the number of bidders. For two simple examples, the losses associated with a reduced number of bidders outweighs any benefits that nontrivial reservation prices might have had in models with an exogonously set number of bidders.

Suggested Citation

  • Richard Engelbrecht-Wiggans, 1987. "On Optimal Reservation Prices in Auctions," Management Science, INFORMS, vol. 33(6), pages 763-770, June.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:6:p:763-770
    DOI: 10.1287/mnsc.33.6.763
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.33.6.763
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.33.6.763?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:33:y:1987:i:6:p:763-770. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.