CInSt Research Seminar "Secret Reserve Prices and Uncertainty in Timber Auctions": Pavel Andreyanov (HSE University)
Pavel Andreyanov will present his research "Secret Reserve Prices and Uncertainty in Timber Auctions" on CInSt research seminar on February 6th.
We propose a novel explanation for the use of secret reserve prices that does not rely on risk-aversion, irrational beliefs, or non-standard preferences. If bidders are better informed than the seller about a common component of auction heterogeneity, the seller can allocate more efficiently by keeping her reserve price secret and revising it after the bids are submitted. In French timber auctions, the government uses an ex-ante secret reserve price, which can be revised down if no bid is above it. We build a model of a first-price auction under unobserved auction heterogeneity (imperfectly observed by the seller) that captures this rationale and derive conditions for identification when the auctioneer's ex-ante signal is observed. We show, both theoretically and empirically, that by allowing the seller to update the reserve price based on the collected bids, efficiency can be improved.
Date: February 06th, 2019, 18:10-19:30.
Location: K416, 11 Pokrovsky Boulevard, Moscow.
Working language: English.
All welcome. If you don't have an HSE ID, please register before 2:00 PM on February 06th: cinst.hse.ru/register.