Research Article
On Asymmetric Reserve Prices
@INPROCEEDINGS{10.4108/eai.8-8-2015.2260330, author={Maciej Kotowski}, title={On Asymmetric Reserve Prices}, proceedings={The Third Conference on Auctions, Market Mechanisms and Their Applications}, publisher={ACM}, proceedings_a={AMMA}, year={2015}, month={8}, keywords={first-price auction second-price auction all-pay auction asymmetric auctions reserve prices mechanism design}, doi={10.4108/eai.8-8-2015.2260330} }- Maciej Kotowski
Year: 2015
On Asymmetric Reserve Prices
AMMA
ICST
DOI: 10.4108/eai.8-8-2015.2260330
Abstract
We investigate equilibrium bidding in standard auctions with asymmetric reserve prices. For example, the auctioneer sets a low reserve price for one subset of bidders and a high reserve price for others. In the first-price auction we identify an equilibrium reserve price externality whereby bidders facing a high reserve price benefit from a reduction of opponents' reserve prices. We also document cases where introducing asymmetric reserve prices can increase the auctioneer's expected revenue compared to an optimal uniform reserve price--even if all bidders are ex ante identical. An extension of the model characterizes equilibrium bidding in asymmetric first-price auctions with asymmetric reserve prices. The use of asymmetric reserve prices in auction design is discussed.
