Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/322674 
Year of Publication: 
2005
Series/Report no.: 
Discussion Papers Series No. 05-14
Publisher: 
Utrecht University, Utrecht School of Economics, Tjalling C. Koopmans Research Institute, Utrecht
Abstract: 
We consider second-price and first-price auctions in the symmetric independentprivate values framework. We modify the standard model by theassumption that the bidders have reference-based utility, where the reserveprice (minimum bid) plays the role of the reference point. In contrast to theusual result, the seller's optimal reserve price is increasing in the number ofbidders. Even if an individual bidder perceives only a very small utility losswhen he has to pay more than the reserve price, the impact on the optimalreserve price can be strong when there are many bidders.
Subjects: 
Auction theory
reference-dependent utility
reserve prices
Document Type: 
Working Paper

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