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Reserve price when bidders are asymmetric

Author

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  • Gunay, Hikmet
  • Meng, Xin
  • Nagelberg, Mark

Abstract

The authors analyze the optimal reserve price in a second price auction when there are N types of bidders whose valuations are drawn from different distribution functions. The seller cannot determine the specific type of each bidder. First, the authors show that the number of bidders affects the reserve price. Second, they give the sufficient conditions for the uniqueness of the optimal reserve price. Third, the authors find that if a bidder is replaced by a stronger bidder, the optimal reserve price may decrease. Finally, they give sufficient conditions that ensure the seller will not use a reserve price; hence, the auction will be efficient.

Suggested Citation

  • Gunay, Hikmet & Meng, Xin & Nagelberg, Mark, 2013. "Reserve price when bidders are asymmetric," Economics Discussion Papers 2013-19, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwedp:201319
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    References listed on IDEAS

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    More about this item

    Keywords

    auction; reserve (reservation) price; asymmetric bidders;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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