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Auctions with Limited Commitment

Qingmin Liu, Konrad Mierendorff, Xianwen Shi and Weijie Zhong

American Economic Review, 2019, vol. 109, issue 3, 876-910

Abstract: We study the role of limited commitment in a standard auction environment. In each period, the seller can commit to an auction with a reserve price but not to future reserve prices. We characterize the set of equilibrium profits attainable for the seller as the period length vanishes. An immediate sale by efficient auction is optimal when there are at least three buyers. For many natural distributions two buyers is enough. Otherwise, we give conditions under which the maximal profit is attained through continuously declining reserve prices.

JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/aer.20170882
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Working Paper: Auctions with Limited Commitment (2018) Downloads
Working Paper: Auctions with Limited Commitment (2013) Downloads
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