Reserve prices in auctions with entry when the seller is risk-averse

Diego Moreno, John Wooders

Research output: Contribution to journalArticle

Abstract

We show that risk aversion raises the public reserve price rP above the seller's cost c, but lowers the secret reserve price rS below the revenue maximizing reserve price r0. Further, rP<rS. Hence, for a risk averse seller, public and secret reserve prices are ordered: c<rP<rS<r0.

Original languageEnglish (US)
Pages (from-to)6-9
Number of pages4
JournalEconomics Letters
Volume154
DOIs
StatePublished - May 1 2017

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Auctions
Risk-averse
Reserve price
Seller
Revenue
Costs
Risk aversion

Keywords

  • Endogenous entry
  • Public and secret reserve prices
  • Risk aversion
  • Second-price auctions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Reserve prices in auctions with entry when the seller is risk-averse. / Moreno, Diego; Wooders, John.

In: Economics Letters, Vol. 154, 01.05.2017, p. 6-9.

Research output: Contribution to journalArticle

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