Adaptive Reserve Prices in Repeated Auctions

Federica Carannante (), Marco Pagnozzi and Elia Sartori ()
Additional contact information
Federica Carannante: Princeton University, https://www.csef.it
Elia Sartori: CSEF, https://csef.it/people/elia-sartori/

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We analyze how the seller adjusts the reserve price in infinitely repeated auctions using the information conveyed by past bids. Bidders are myopic and have constant valuations; losers are replaced by new bidders, and winners leave with an exogenous probability. Our model is a stylized description of the market for online display advertisements, where publishers sell impressions through real-time first- or second-price auctions. The optimal reserve price is either equal to the value of the last winner, or lower than it when the winner’s value is sufficiently high. In this second case, the reserve price decreases in the winner’s value in a first-price auction, while it is independent of it in a second-price auction. Because past winners who are outbid substitute for the reserve price in a second-price auction, the seller often sets a lower reserve price and obtains a higher revenue than in a first-price auction. Long-run trade may be non-monotonic in the probability that winners leave.

Date: 2024-06-20
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.csef.it/WP/wp720.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:720

Access Statistics for this paper

More papers in CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy Contact information at EDIRC.
Bibliographic data for series maintained by Dr. Maria Carannante ().