Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252098 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9581
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper discusses the role of secret versus public reserve prices when bidders' valuations depend positively on the seller's private signal. A public reserve price is announced before the auction starts, and a secret reserve price is disclosed after the highest bid has been reached. The public reserve price regime may warrant a distortion as a good seller type may have to increase the reserve price beyond payo˙-maximization in order to be able to credibly signal her type. We introduce and determine a rational signaling equilibrium which adds two domination-based conditions to the belief structure of a weak perfect Bayesian equilibrium. We show that a secret (public) reserve price design qualifies as an equilibrium if the distortion is large (small).
Subjects: 
auctions
interdependent values
optimal reserve prices
rational signaling
JEL: 
D44
Document Type: 
Working Paper
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