Reserve Price Effects in Auctions: Estimates from Multiple RD Designs

Lars Nesheim and Imran Rasul
Authors registered in the RePEc Author Service: Syngjoo Choi

No 10486, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We present evidence from 260,000 online auctions of second-hand cars to identify the impact of public reserve prices on auction outcomes. We exploit multiple discontinuities in the relationship between reserve prices and vehicle characteristics to present causal RD estimates of reserve price impacts. We find an increase in reserve price decreases the number of bidders, increases the likelihood the object remains unsold, and increases expected revenue conditional on sale. We then combine these estimates to calibrate the reserve price effect on the auctioneer's ex ante expected revenue. This reveals the auctioneer's reserve price policy to be locally optimal.

Keywords: Auctions; Regression discontinuity; Reserve price (search for similar items in EconPapers)
JEL-codes: D44 L11 L62 (search for similar items in EconPapers)
Date: 2015-03
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Citations: View citations in EconPapers (1)

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Working Paper: Reserve price effects in auctions: estimates from multiple RD designs (2010)
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