Deposit Requirements in Auctions-Reference-Cited by-同舟云学术

Deposit Requirements in Auctions

Published:2022-11-01 Issue:4 Volume:14 Page:465-493
ISSN:1945-7669
Container-title:American Economic Journal: Microeconomics
language:en
Short-container-title:American Economic Journal: Microeconomics

Author:

Che Xiaogang¹,Li Tong²,Lu Jingfeng³,Zheng Xiaoyong⁴

Affiliation:

1. Department of Economics, City University of London (email: )

2. Department of Economics, Vanderbilt University (email: )

3. Department of Economics, National University of Singapore (email: )

4. Department of Agricultural and Resource Economics (email: )

Abstract

We examine optimal auction design when buyers may receive future outside offers. The winning bidder may choose to default upon observing her outside offer. Under the optimal mechanism, the bidder with the highest value wins if and only if her value is above a cutoff, and the winner never defaults. The optimal auction takes the form of a second-price auction with a reserve price and a deposit by the winning bidder. Under regularity conditions, both the optimal reserve price and the deposit increase when the distribution of outside offers worsens. (JEL D44, D82)

Publisher

American Economic Association

Subject

General Economics, Econometrics and Finance

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/mic.20200206

Reference24 articles.

1. Search Deterrence

2. Bidding up, buying out and cooling-off: an examination of auctions with withdrawal rights

3. The Right to Withdraw in Contract Law

4. Optimal Repeated Purchases When Sellers Are Learning about Costs

5. Laboratory Testbeds and Non-Market Valuation: The Case of Bidding Behavior in a Second-Price Auction with an Outside Option