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

Diego Moreno, John Wooders

Research output: Contribution to journalArticlepeer-review

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

Keywords

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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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