Auctioning with Aspirations: Keep Them Low (Enough)

Nicholas Shunda ()

No 2009-02, Alumni working papers from University of Connecticut, Department of Economics

Abstract: In an auction with a buy price, a seller offers bidders the opportunity to forgo competing in an auction by transacting immediately at a pre-specified fixed price. If a seller has aspirations in the form of a reference price that depends upon the auction's reserve price and buy price, she does best to keep her aspirations sufficiently low by designing a no-reserve auction with a buy price low enough that some bidder types would exercise it with positive probability in equilibrium. The seller is indifferent between the auction component of her mechanism being a first- or second-price auction.

Keywords: Auction; Aspiration; Buy price; Internet; Reference-dependence (search for similar items in EconPapers)
JEL-codes: C72 D44 D82 L86 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2009-07
New Economics Papers: this item is included in nep-mic
Note: I would like to thank Lorenzo Garbo and Johannes Moenius for helpful suggestions.
References: View references in EconPapers View complete reference list from CitEc
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Working Paper: Auctioning with Aspirations: Keep Them Low (Enough) (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:alumni:2009-02

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