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A note on reserve price commitments in the Vickrey auction

Ela Glowicka () and Jonathan Beck

MPRA Paper from University Library of Munich, Germany

Abstract: This note provides a simple explanation why sellers rarely set optimal reserve prices in one-shot auctions. In a standard sealed-bid second-price auction, bidders with private values do not bid truthfully if the seller cannot commit to her announced reserve price. Consequently, expected revenue may be lower than without the announcement of a reserve price.

Keywords: Vickrey auction; reserve price; commitment (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2006-08
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