Note on "Guarantees in Auctions: The Auction House as Negotiator and Managerial Decision Maker"

Eric A. Greenleaf (), Jun. Ma, Wanhua. Qiu, Ambar G. Rao and Atanu R. Sinha
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Eric A. Greenleaf: Stern School of Business, New York University, New York, New York 10012
Jun. Ma: Institute of Systems Science, Academy of Mathematics and Systems Sciences, Chinese Academy of Sciences, Beijing 100083, P.R. China
Wanhua. Qiu: School of Management, Beijing University of Aeronautics and Astronautics, Beijing 100083, P.R. China
Ambar G. Rao: Olin School of Business, Washington University, St. Louis, Missouri 63130
Atanu R. Sinha: Leeds School of Business University of Colorado, Boulder, Colorado 80309

Management Science, 2002, vol. 48, issue 12, 1640-1644

Abstract: In this note, we identify two errors in Greenleaf, Rao, and Sinha's (1993) analysis of negotiation of guarantees in auctions. This note provides a high-level but self-contained summary of the revised results. We find that, in contrast with the earlier claim, guaranteed auctions lead to greater total expected revenue than conventional auctions. The ability to bargain over guarantee values and commissions certainly benefits sellers but may hurt the profits of auction houses. We relate these results to recent events in auction markets.

Date: 2002
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Citations: View citations in EconPapers (3)

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