In the basic auction model, the optimal reserve price may depend on the number of bidders

Domenico Menicucci

Journal of Economic Theory, 2021, vol. 198, issue C

Abstract: A widespread claim in the auction literature about the most well known auction setting with i.i.d. private values is that the optimal reserve price for a second price auction is independent of the number n of bidders. This is indeed the case if the virtual valuation function is increasing, but this result fails to hold if the virtual valuation is non-monotone. In such case the optimal reserve price is weakly increasing in n and, as n tends to infinity, it tends to the highest regular valuation with zero virtual value.

Keywords: Second price auction; Reserve price; Virtual valuation (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:198:y:2021:i:c:s0022053121001885

DOI: 10.1016/j.jet.2021.105371

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