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Reserve price effects in auctions: estimates from multiple regression-discontinuity designs

Choi, S; Nesheim, L; Rasul, I; (2016) Reserve price effects in auctions: estimates from multiple regression-discontinuity designs. Economic Enquiry , 54 (1) pp. 294-314. 10.1111/ecin.12226. Green open access

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Abstract

We present evidence from 260,000 online auctions of second-hand cars to identify the impact of public reserve prices on auction outcomes. We exploit multiple discontinuities in the relationship between reserve prices and vehicle characteristics to present causal regression-discontinuity estimates of reserve price impacts. We find an increase in reserve price decreases the number of bidders, increases the likelihood the object remains unsold, and increases expected revenue conditional on sale. We then combine these estimates to calibrate the reserve price effect on the auctioneer's ex ante expected revenue. This reveals the auctioneer's reserve price policy to be locally optimal.

Type: Article
Title: Reserve price effects in auctions: estimates from multiple regression-discontinuity designs
Open access status: An open access version is available from UCL Discovery
DOI: 10.1111/ecin.12226
Publisher version: http://dx.doi.org/10.1111/ecin.12226
Language: English
Additional information: This is the peer reviewed version of the following article: Choi, S; Nesheim, L; Rasul, I; (2016) Reserve price effects in auctions: estimates from multiple regression-discontinuity designs. Economic Enquiry, 54 (1) pp. 294-314, which has been published in final form at: http://dx.doi.org/10.1111/ecin.12226. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving (http://olabout.wiley.com/WileyCDA/Section/id-828039.html#terms).
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/1492753
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