Journal
AMERICAN ECONOMIC REVIEW
Volume 109, Issue 3, Pages 876-910Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.20170882
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Funding
- National Science Foundation [SES-1824328]
- Swiss National Science Foundation
- European Research Council [ESEI-249433]
- Social Sciences and Humanities Research Council of Canada
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We study the role of limited commitment in a standard auction environment. In each period, the seller can commit to an auction with a reserve price but not to future reserve prices. We characterize the set of equilibrium profits attainable for the seller as the period length vanishes. An immediate sale by efficient auction is optimal when there are at least three buyers. For many natural distributions two buyers is enough. Otherwise, we give conditions under which the maximal profit is attained through continuously declining reserve prices.
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