Discussion Paper
No. 2013-19 | February 28, 2013
Hikmet Gunay, Xin Meng and Mark Nagelberg
Reserve Price When Bidders are Asymmetric


The authors analyze the optimal reserve price in a second price auction when there are N types of bidders whose valuations are drawn from different distribution functions. The seller cannot determine the specific type of each bidder. First, the authors show that the number of bidders affects the reserve price. Second, they give the sufficient conditions for the uniqueness of the optimal reserve price. Third, the authors find that if a bidder is replaced by a stronger bidder, the optimal reserve price may decrease. Finally, they give sufficient conditions that ensure the seller will not use a reserve price; hence, the auction will be efficient.

JEL Classification:


Cite As

Hikmet Gunay, Xin Meng, and Mark Nagelberg (2013). Reserve Price When Bidders are Asymmetric. Economics Discussion Papers, No 2013-19, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2013-19

Comments and Questions

Anonymous - Comment from a invited reader
March 25, 2013 - 02:20
I think the paper could be improved by analyzing a limited case more deeply. My comments and suggestions are in the attached file.

Anonymous - Referee Report 1
April 24, 2013 - 08:24
see attached file

Anonymous - Referee Report 2
June 03, 2013 - 08:23
see attached file