Auctions with Imperfect Commitment when the Reserve May Serve as a Signal

Arbeitspapier

If bidders are uncertain whether the auctioneer sticks to the announced reserve, some bidders respond by strategic non-participation, speculating that the auctioneer may revoke the reserve. However, the reserve inadvertently signals the auctioneer's type, which drives a unique separating and a multitude of pooling equilibria. If one eliminates belief systems that violate the intuitive criterion , one obtains a unique equilibrium reserve price equal to the seller's own valuation. Paradoxically, even if bidders initially believe that the auctioneer is bound by his reserve almost with certainty, commitment has no value.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4586

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Auctions ; Rationing; Licensing
• Subject: auctions ; signaling ; imperfect commitment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jun, Byoung Heon ; Wolfstetter, Elmar G.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/93476
• Last update: 10.03.2025, 11:45 AM CET