Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93476 
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper No. 4586
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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.
Subjects: 
auctions
signaling
imperfect commitment
JEL: 
D21
D43
D44
D45
Document Type: 
Working Paper
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