Auctions with Limited Commitment
- (pp. 876-910)
AbstractWe study the role of limited commitment in a standard auction environment. In each period, the seller can commit to an auction with a reserve price but not to future reserve prices. We characterize the set of equilibrium profits attainable for the seller as the period length vanishes. An immediate sale by efficient auction is optimal when there are at least three buyers. For many natural distributions two buyers is enough. Otherwise, we give conditions under which the maximal profit is attained through continuously declining reserve prices.
CitationLiu, Qingmin, Konrad Mierendorff, Xianwen Shi, and Weijie Zhong. 2019. "Auctions with Limited Commitment." American Economic Review, 109 (3): 876-910. DOI: 10.1257/aer.20170882
- D44 Auctions
- D82 Asymmetric and Private Information; Mechanism Design