Highlights of the CInSt research seminar with Pavel Andreyanov
Pavel Andreyanov presented his research "Secret Reserve Prices and Uncertainty in Timber Auctions" on CInSt research seminar on February 6th.
In the auction theory, there is almost no discussion of secret reserve prices, mostly because people do not understand what’s going on, or they think of commitment problems. Nonetheless, secret reserve prices are quite popular in the real world.
Why would someone use a secret reserve price?
- prevent collusion
- leverage risk aversion
- increase participation
- extract information from the bids.
The author uses the case study of Timber sales in France to answer the question: “Is it possible for the auctioneer to consistently (in equilibrium) extract information from the bids? Can welfare/profit be increased?”
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