Bidding behaviors in eBay auctions: secret reservation price and endogenous entry

Feng Jiao

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the secret reservation price in eBay auctions. Under the assumptions of secret and public reservation price, the bidders choose the optimal bidding function and the seller selects equilibrium reservation price. This model argues that the choice of secret reservation price is rational for the seller, as they can generate higher revenue in certain conditions. It predicts that, under endogenous entry, secret reservation price leads to higher revenue since it attracts more bidders to the auction. This effect is more noticeable for luxury goods. However, secret and public reservation prices generate identical revenue for the seller if entry is exogenous. Furthermore, the results are supported by numerous recent empirical works.

Keywords: eBay; auctions; secret reservation prices; endogenous entry; mechanism design (search for similar items in EconPapers)
JEL-codes: D44 L1 L16 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

Published in Journal of Economics and Behavioral Studies 5.3(2011): pp. 326-331

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:35081

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