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

publication date

  • May 2017

volume

  • 154

International Standard Serial Number (ISSN)

  • 0165-1765

Electronic International Standard Serial Number (EISSN)

  • 1873-7374

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 ro. Further, r(p) < r(s). Hence, for a risk averse seller, public and secret reserve prices are ordered: c < r(p) < r(s) < r(0). (C) 2017 Elsevier B.V. All rights reserved.

keywords

  • second-price auctions; endogenous entry; public and secret reserve prices; risk aversion