Reserve Price when Bidders Are Asymmetric

11 Pages Posted: 25 Jul 2012 Last revised: 22 Mar 2017

See all articles by Hikmet Gunay

Hikmet Gunay

University of Manitoba; HIAS

Xin Meng

Southwestern University of Finance and Economics (SWUFE)

Mark Nagelberg

Prairie Research Associates, Inc. (PRA, Inc.)

Date Written: March 18, 2017

Abstract

We analyze the optimal reserve price in a second price auction when there are N types of bidders whose valuations are drawn from different distribution functions. The seller cannot determine the specific “distribution type” of each bidder. In this paper, we give sufficient conditions for the uniqueness of the optimal reserve price. Then, we give sufficient conditions that ensure the seller will not use a reserve price; hence, the auction will be efficient.

Keywords: Auction, Reserve (Reservation) Price, Asymmetric Bidders

JEL Classification: D44

Suggested Citation

Gunay, Hikmet and Meng, Xin and Nagelberg, Mark, Reserve Price when Bidders Are Asymmetric (March 18, 2017). ISER Discussion Paper No. 849, Available at SSRN: https://ssrn.com/abstract=2116915 or http://dx.doi.org/10.2139/ssrn.2116915

Hikmet Gunay (Contact Author)

University of Manitoba ( email )

Economics
Winnipeg R3T 5V5, Manitoba
Canada

HIAS ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

Xin Meng

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Mark Nagelberg

Prairie Research Associates, Inc. (PRA, Inc.) ( email )

500-363 Broadway
Winnipeg, Manitoba R3C 3N9
Canada

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