Auctions with options for re-auction

Detalhes bibliográficos
Autor(a) principal: Menezes, Flavio Marques
Data de Publicação: 2003
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
Texto Completo: http://hdl.handle.net/10438/12566
Resumo: We examine the role of seller bidding and reserve prices in an infinitely repeated independent-private-value (IPV) ascending-price auction. The seller has a single object that she values at zero. At the end of any auction round, she may either sell to the highest bidder or pass-in the object and hold a new auction next period. New bidders are drawn randomly in each round. The ability to re-auction motivates a notion of reserve price as the option value of retaining the object for re-auctioning. Even in the absence of a mechanism with which to commit to a reserve price, the optimal 'secret' reserve is shown to exceed zero. However, despite the infinite repetition, there may be significant value to the seller from a binding reserve price commitment: the optimal binding reserve is higher than the optimal 'secret' reserve, and may be substantially so, even with very patient players. Furthermore, reserve price commitments may even be socially preferable at high discount factors. We also show that the optimal 'phantom' bidding strategy for the seller is revenue-equivalent to a commitment to an optimal public reserve price.
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spelling Menezes, Flavio MarquesEscolas::EPGEFGV2014-11-24T13:15:58Z2014-11-24T13:15:58Z2003-01-23http://hdl.handle.net/10438/12566We examine the role of seller bidding and reserve prices in an infinitely repeated independent-private-value (IPV) ascending-price auction. The seller has a single object that she values at zero. At the end of any auction round, she may either sell to the highest bidder or pass-in the object and hold a new auction next period. New bidders are drawn randomly in each round. The ability to re-auction motivates a notion of reserve price as the option value of retaining the object for re-auctioning. Even in the absence of a mechanism with which to commit to a reserve price, the optimal 'secret' reserve is shown to exceed zero. However, despite the infinite repetition, there may be significant value to the seller from a binding reserve price commitment: the optimal binding reserve is higher than the optimal 'secret' reserve, and may be substantially so, even with very patient players. Furthermore, reserve price commitments may even be socially preferable at high discount factors. We also show that the optimal 'phantom' bidding strategy for the seller is revenue-equivalent to a commitment to an optimal public reserve price.engEscola de Pós-Graduação em Economia da FGVSeminários de pesquisa econômica da EPGETodo cuidado foi dispensado para respeitar os direitos autorais deste trabalho. Entretanto, caso esta obra aqui depositada seja protegida por direitos autorais externos a esta instituição, contamos com a compreensão do autor e solicitamos que o mesmo faça contato através do Fale Conosco para que possamos tomar as providências cabíveisinfo:eu-repo/semantics/openAccessphantom bidding, re-auction option, reserve price, internet auctions.EconomiaLeilõesAuctions with options for re-auctioninfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articlereponame:Repositório Institucional do FGV (FGV Repositório Digital)instname:Fundação Getulio Vargas (FGV)instacron:FGVORIGINAL1122.pdf1122.pdfapplication/pdf505869https://repositorio.fgv.br/bitstreams/078d182b-7104-47d6-a324-98dbfdf72dd8/downloadef5c81aad8ee8d001e5d6cc78b29234aMD51LICENSElicense.txtlicense.txttext/plain; charset=utf-84707https://repositorio.fgv.br/bitstreams/e97d2a54-5d6d-4c3b-96bb-cae2f8744f87/downloaddfb340242cced38a6cca06c627998fa1MD52TEXT1122.pdf.txt1122.pdf.txtExtracted 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dc.title.eng.fl_str_mv Auctions with options for re-auction
title Auctions with options for re-auction
spellingShingle Auctions with options for re-auction
Menezes, Flavio Marques
phantom bidding, re-auction option, reserve price, internet auctions.
Economia
Leilões
title_short Auctions with options for re-auction
title_full Auctions with options for re-auction
title_fullStr Auctions with options for re-auction
title_full_unstemmed Auctions with options for re-auction
title_sort Auctions with options for re-auction
author Menezes, Flavio Marques
author_facet Menezes, Flavio Marques
author_role author
dc.contributor.unidadefgv.por.fl_str_mv Escolas::EPGE
dc.contributor.affiliation.none.fl_str_mv FGV
dc.contributor.author.fl_str_mv Menezes, Flavio Marques
dc.subject.por.fl_str_mv phantom bidding, re-auction option, reserve price, internet auctions.
topic phantom bidding, re-auction option, reserve price, internet auctions.
Economia
Leilões
dc.subject.area.por.fl_str_mv Economia
dc.subject.bibliodata.por.fl_str_mv Leilões
description We examine the role of seller bidding and reserve prices in an infinitely repeated independent-private-value (IPV) ascending-price auction. The seller has a single object that she values at zero. At the end of any auction round, she may either sell to the highest bidder or pass-in the object and hold a new auction next period. New bidders are drawn randomly in each round. The ability to re-auction motivates a notion of reserve price as the option value of retaining the object for re-auctioning. Even in the absence of a mechanism with which to commit to a reserve price, the optimal 'secret' reserve is shown to exceed zero. However, despite the infinite repetition, there may be significant value to the seller from a binding reserve price commitment: the optimal binding reserve is higher than the optimal 'secret' reserve, and may be substantially so, even with very patient players. Furthermore, reserve price commitments may even be socially preferable at high discount factors. We also show that the optimal 'phantom' bidding strategy for the seller is revenue-equivalent to a commitment to an optimal public reserve price.
publishDate 2003
dc.date.issued.fl_str_mv 2003-01-23
dc.date.accessioned.fl_str_mv 2014-11-24T13:15:58Z
dc.date.available.fl_str_mv 2014-11-24T13:15:58Z
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dc.relation.ispartofseries.por.fl_str_mv Seminários de pesquisa econômica da EPGE
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dc.publisher.none.fl_str_mv Escola de Pós-Graduação em Economia da FGV
publisher.none.fl_str_mv Escola de Pós-Graduação em Economia da FGV
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