Seller Compound Search for Bidders

Joosung Lee and Daniel Z. Li

Journal of Industrial Economics, 2023, vol. 71, issue 4, 1004-1037

Abstract: This article studies a seller's compound search for bidders by a deadline. We show that the optimal search outcomes can be implemented by a sequence of second‐price auctions, characterized by declining reserve prices and increasing search intensities (sample sizes) over time. The monotonicity results are robust in both cases of short‐lived and long‐lived bidders. Furthermore, a seller with short‐lived bidders sets lower reserve prices and searches more intensively than one with long‐lived bidders. We also show that the inefficiency of an optimal search auction can stem from its inefficient search rule.

Date: 2023
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