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The construction land quota pricing mechanism with cost plus pricing method is not sufficient to reflect its intrinsic value. This diminishes the willingness of farmers to voluntarily reclaim abandoned residential and other rural construction land, leading to suboptimal efficiency in rural land utilization and an excessive squandering of rural land resources. Thus, a sequential auction model with two stages for complementary goods was constructed, which considered the synergic characteristics between the land and quota. Further, regret psychology of bidder was considered in the case of winning or losing. A rational pricing mechanism has been developed to allocate construction land quotas, aiming to enhance farmers' motivation to the vacant homesteads of reclamation and revitalizing the stock of rural construction land. The results revealed that the regret psychology in the case of winning would decrease the transaction price of the quota, i.e., the greater the perceived regret in the case of winning, the more significant the reduction in the bidding price offered. Moreover, the regret psychology in the event of losing/failure would increase the transaction price of quota. Furthermore, publishing only the winner's price after the auction leads to the highest price of the quota offered by the bidder. In contrast, publishing only the loser's bidding price leads to the lowest transaction price of the quota offered by the bidder. In addition, the fee for delayed construction would increase the bidding price of the construction land quota. Therefore, local governments should consider announcing only the winner of price after the quota auction has ended. In addition, imposing a fee for delayed construction would enhance the transaction price of land quota, increase farmers' revenue from land reclamation, and incentivize farmers to reclaim unused rural land. [ABSTRACT FROM AUTHOR]

This paper investigates how a seller designs the down payment rate and a bidder's strategy in equilibrium in a first-price debt auction in which the winning bidder can exercise an investment project that can be expanded or contracted later. I find that the seller should ask a higher rate and a bidder will bid more when the bidder suffers larger losses in bankruptcy. This finding also applies to the case in which the winning bidder resells the installed capital stock at a lower price provided that he maintains the same or expands capacity on the verge of bankruptcy. As compared to the case in which a seller optimally designs the down payment rate, the seller who sets a lower one will receive lower revenue and the winning bidder, who installs a smaller capacity, will bid less and thus gain more, but his probability of bankruptcy will remain unchanged. [ABSTRACT FROM AUTHOR]

Operating under both supply-side and demand-side uncertainties, a mobile-promotion platform conducts advertising campaigns for individual advertisers. Campaigns arrive dynamically over time, which is divided into seasons; each campaign requires the platform to deliver a target number of mobile impressions from a desired set of locations over a desired time interval. The platform fulfills these campaigns by procuring impressions from publishers, who supply advertising space on apps via real-time bidding on ad exchanges. Each location is characterized by its win curve, that is, the relationship between the bid price and the probability of winning an impression at that bid. The win curves at the various locations of interest are initially unknown to the platform, and it learns them on the fly based on the bids it places to win impressions and the realized outcomes. Each acquired impression is allocated to one of the ongoing campaigns. The platform's objective is to minimize its total cost (the amount spent in procuring impressions and the penalty incurred due to unmet targets of the campaigns) over the time horizon of interest. Our main result is a bidding and allocation policy for this problem. We show that our policy is the best possible (asymptotically tight) for the problem using the notion of regret under a policy, namely the difference between the expected total cost under that policy and the optimal cost for the clairvoyant problem (i.e., one in which the platform has full information about the win curves at all the locations in advance): The lower bound on the regret under any policy is of the order of the square root of the number of seasons, and the regret under our policy matches this lower bound. We demonstrate the performance of our policy through numerical experiments on a test bed of instances whose input parameters are based on our observations at a real-world mobile-promotion platform. This paper was accepted by Baris Ata, stochastic models and simulation. Supplemental Material: The online appendices are available at https://doi.org/10.1287/mnsc.2022.4441. [ABSTRACT FROM AUTHOR]

Computational methods are used to determine a profit-maximizing shading factor by which rational bidders shade their bid in first price sealed bid auctions for a broad range of realistic scenarios when the prior is diffuse. Bidders' valuations may have both common value and firm-specific components, and the accuracy of their estimates of the common value component may differ. In addition, we allow for a subset of "naive" rivals, defined as bidders who do not account for the Winners' Curse. Our computations show that profit-maximizing shading is greatly impacted by asymmetries in the bidding population and, in particular, by the presence of naive bidders. Failing to account for the presence of naive bidders results in underbidding only in one case, when facing a single rival who is naive, and in overbidding in all other cases. Overbidding is particularly severe when the population of naive competitors is large. [ABSTRACT FROM AUTHOR]

Integrating Cost Reduction and Supplier Selection Activities Manufacturers who outsource production may find ways to reduce suppliers' cost to lower the contract price. Conventionally, this is done after supplier selection. However, in practice, a sizable portion of the degree to which the manufacturer can help a supplier reduce cost could be learned before the supplier starts production. This opens up a possibility to better integrate supplier selection and cost-reduction activities. In "Procurement Mechanisms with Postauction Preaward Cost-Reduction Investigations," Chen, Beil, and Duenyas explore an alternative procurement process wherein, after suppliers' initial pricing bids are collected, the manufacturer investigates suppliers' cost-saving potential and then leverages this information to select the contract winner. They provide analytical and numerical evidence that this integrated procurement process not only helps the manufacturers reduce cost significantly, but also benefits the suppliers in many plausible scenarios. A buyer seeking to outsource production may be able to find ways to reduce a potential supplier's cost, for example, by suggesting improvements to the supplier's proposed production methods. We study how a buyer could use such cost-reduction investigations by proposing a three-step supplier selection mechanism: First, each of several potential suppliers submits a price bid for a contract. Second, for each potential supplier, the buyer can exert an effort to see if the buyer can identify how the supplier could reduce their cost to perform the contract; the understanding is that if savings are found, they are passed on to the buyer if the supplier is awarded the contract. Third, the buyer awards the contract to whichever supplier has the lowest updated bid (the supplier's initial bid price minus any cost reduction the buyer is able to identify for that supplier). For this proposed process, we characterize how the buyer's decision on which suppliers for which to investigate cost reductions in step 2 is affected by the aggressiveness of the suppliers' bids in step 1. We show that, even if the buyer does not share the cost savings the buyer identifies in step 2, ex ante symmetric suppliers are actually better off (ex ante) in our proposed mechanism than in a setting without such cost-reduction investigations, resulting in a win–win for the buyer and suppliers. When suppliers' cost and cost-reduction distributions become very heterogeneous, the win–win situation may no longer hold, but every supplier still has an incentive to allow the buyer to investigate them in step 2 because it increases their chance of winning the contract. Using an optimal mechanism analysis, our numerical studies show that our proposed bid–investigate–award mechanism helps the buyer achieve near-optimal performance despite its simplicity. Supplemental Material: The online appendix is available at https://doi.org/10.1287/opre.2022.2349. [ABSTRACT FROM AUTHOR]

We introduce risk-averse bidders in a security-bid auction to analyze how the security design affects bidders' equilibrium behavior and, as a result, the revenue and efficiency of the auction. We show that steeper securities provide more insurance because they allow bidders to smooth payoffs across realizations. Such insurance levels the playing field for more-risk-averse bidders, inducing them to bid more aggressively. As a consequence, the auction's allocative efficiency weakly increases when the seller switches from a flatter to a steeper security. Furthermore, we prove that when bidders are homogeneously and sufficiently risk averse, the only security that guarantees Pareto efficiency is the steepest, that is, a call option. We also determine the relationship between the security design and the auction format. In particular, we show that for convex and superconvex families of securities, the first-price auction yields higher expected revenues, provided a technical condition, whereas for subconvex families, the second price yields higher expected revenues, provided that bidders are moderately risk averse. Finally, we show that steeper securities also attract higher entry from an ex ante perspective, when entry is costly, and discuss the effects that the presence of risk aversion has on informal auctions. This paper was accepted by Gustavo Manso, finance. [ABSTRACT FROM AUTHOR]

Information generated in online markets can affect both buyers' and sellers' expectations and therefore their choices. In this research, we investigate the effect of market information, generated in online auction markets, on buyers' expectations and choices. To clear large inventories, sellers often conduct many auctions selling identical items over time, which creates an online auction market where competition dynamics spill over from one to auction to another. In these markets, bidders can participate in many auctions over a period of time, observe market information (supply, demand, and competition), and gain experience to increase their payoffs. We observe that despite having an opportunity to compete and win in future auctions, many bidders stop participating in these auction markets. We argue that observed market information affects their choices. We explore how bidders form expectations about market supply, demand, and competition based on information from two sources--market design parameters and behavior of market participants. By employing a hierarchical Bayesian latent attrition model, we empirically detect and investigate the effect of bidders' expected market supply, demand, and competition on their attrition in these markets. Our study shows that the effect of market information on attrition is nuanced by bidders' value heterogeneity. Through the lenses of behavioral economics theories, we show that the attrition behavior of high-value bidders is completely opposite that of low-value bidders. We discuss the practical implications of our findings. [ABSTRACT FROM AUTHOR]

This article analyzes auctions that can feature two bidding rounds for the sale of a single good. In the first round, the seller, after analyzing the received bids, may elect to have k bidders rebid. The highest bidder in the second round then acquires the asset at the highest bid price. We use a sample of 67 properties that sold through this auction process. The 40 hotels in this sample are matched to a control group of 157 hotel properties that were sold in the conventional manner in order to develop a hedonic model for "conventional" sale prices. Using this model, we find that the double round auction mechanism increases the seller's expected revenue significantly: Specifically, in our sample, we estimate that the expected value of a double round auction bid is 8.4% higher than the estimated price if the property were sold using traditional methods. In addition, we show that the average bid is not significantly different from the estimated sale price. We further find (controlling for property characteristics) that the average bid increases by 3.7% from the first to the second round. [ABSTRACT FROM AUTHOR]

Combinatorial auctions can be employed in the fields such as spectrum auction, network routing, railroad segment, and energy auction, which allow multiple goods to be sold simultaneously and any combination of goods to be bid and the maximum sum of combinations of bidding prices to be calculated. However, in traditional combinatorial auction mechanisms, data concerning bidders' price and bundle might reveal sensitive information, such as personal preference and competitive relation since the winner determination problem needs to be resolved in terms of sensitive data as above. In order to solve this issue, this paper exploits a privacy-preserving and verifiable combinatorial auction protocol (PP-VCA) to protect bidders' privacy and ensure the correct auction price in a secure manner, in which we design a one-way and monotonically increasing function to protect a bidder's bid to enable the auctioneer to pick out the largest bid without revealing any information about bids. Moreover, we design and employ three subprotocols, namely, privacy-preserving winner determination protocol, privacy-preserving scalar protocol, and privacy-preserving verifiable payment determination protocol, to implement the combinatorial auction with bidder privacy and payment verifiability. The results of comprehensive experimental evaluations indicate that our proposed scheme provides a better efficiency and flexibility to meet different types of data volume in terms of the number of goods and bidders. [ABSTRACT FROM AUTHOR]

We consider a first-price sealed-bid procurement auction between two capacity constrained bidders. Either bidder, due to the capacity constraint, is unable to fulfill the auctioned project from a buyer. We consider two formats of capacity cooperation between the two competing bidders: ex ante subcontracting and ex post subcontracting. In the former case, two bidders first bargain over the capacity cooperation contract and then compete with each other by bidding for the buyer's project. In the latter case, two bidders first submit bids to the buyer and then bargain over the capacity cooperation contract. With ex ante or ex post subcontracting, two bidders have the so-called co-opetition relationship: they compete to win the auction but cooperate through subcontracting. We find that bidders' subcontract timing has a fundamental impact on their competitive bidding behavior and profits. Both bidders will benefit from the ex ante subcontracting, and submit higher equilibrium bid prices, compared to the case without subcontracting. The ex post subcontracting, however, will lower the equilibrium bid price and may hurt the bidder with capacity advantage when bidders' relative bargaining power is not consistent with the relative capacity advantage. [ABSTRACT FROM AUTHOR]

As measured by the number of bidders that publicly attempt to acquire a target, the takeover arena in the 1990s appears noncompetitive. However, we provide novel data on the pre-public, private takeover process that indicates that public takeover activity is only the tip of the iceberg of actual takeover competition during the 1990s. We show a highly competitive market where half of the targets are auctioned among multiple bidders, while the remainder negotiate with a single bidder. In event study analysis, we find that the wealth effects for target shareholders are comparable in auctions and negotiations. [ABSTRACT FROM AUTHOR]

Do consumers prefer auctions that allow them to place more precise bids to auctions that accept less precise bids? Can consumers accurately estimate their need for price-elicitation precision? This research addresses these questions by applying the notion of compatibility to the relationship between consumers' bidding price uncertainty and the precision implied by the price-elicitation task. Data from four experiments show that when consumers are uncertain about the optimal bidding price, decision tasks requiring elicitation of precise bids lead to lower decision confidence, and vice versa. It is further shown that consumers display stronger preference for high-precision auctions, even though such auctions are associated with less confident pricing decisions. [ABSTRACT FROM AUTHOR]

Target firms often face bidders that are not equally well informed, which reduces competition, because bidders with less information fear the winner's curse more. We analyze how targets should be sold in this situation. We show that a sequential procedure can extract the highest possible transaction price. The target first offers an exclusive deal to a better-informed bidder, without considering a less well-informed bidder. If rejected, the target offers either an exclusive deal to the less well-informed bidder, or a modified first-price auction. Deal protection devices can be used to enhance a target's commitment to the procedure. [ABSTRACT FROM AUTHOR]

We analyze an e-market design that allows multiple market segments to be served simultaneously with a single generalized combinatorial auction. The mechanism uses rule-based bids designed to accommodate various kinds of bidders, such as those more sensitive to price or those more restricted in their requirements. We demonstrate experimentally--using agent-based simulation of the actual market for television advertising slots--that the rule-based approach effectively handles the wide range of market segments, while maintaining buyer and seller surplus and efficiently allocating goods. [ABSTRACT FROM AUTHOR]

The authors develop a general parametric modeling framework for bidding behavior in Internet auctions. Toward this end, they incorporate four key components of the bidding process under their framework: whether people bid on an auction, (if so) who bids, when they bid, and how much they bid over the entire sequence of bids in an auction. This integrated framework is based on a single, latent, time-varying construct of consumer willingness to bid, which bidders have and update for a particular auction item over the course of the auction duration. Using a database of notebook auctions from one of the largest Internet auction sites in Korea, the authors demonstrate that this general (yet parsimonious) model captures the key behavioral aspects of bidding behavior. Furthermore, the authors provide a valuable tool for managers at auction sites to conduct their customer relationship management efforts, which require them to evaluate the “goodness” of the listed auction items (whether people bid) and the goodness of the potential bidders (who bids, when they bid, and how much they bid). [ABSTRACT FROM AUTHOR]

We contribute to the debate on the optimal design of multiunit auctions by developing and testing robust implications of the leading theory of uniform price auctions on the bid distributions submitted by individual bidders. The theory, which emphasizes market power, has little support in a data set of Finnish Treasury auctions. A reason may be that the Treasury acts strategically by determining supply after observing bids, apparently treating the auctions as a repeated game between itself and primary dealers. Bidder behavior and underpricing react to the volatility of bond returns in a way that suggests bidders adjust for the winner's curse. [ABSTRACT FROM AUTHOR]

Enabled by advances in grid and network computing architectures for the delivery of on-demand computing services, the vision of an e-services economy in which computing will be as ubiquitous as a utility is becoming a possibility in business computing. Major firms in the computing industry such as IBM, Hewlett-Packard, and Sun Microsystems are focusing on agility and flexibility of computing resources and gearing up for their own versions of on-demand computing and information technology (IT) outsourcing solutions. The successful introduction of these new computing models requires the development of appropriate pricing mechanisms that are consistent with the enabling technologies. Our paper introduces the notion of contingent auctions to address this lacuna. In contingent auctions, users bid for computing resources in an auction, but are relieved from the contract (paying a penalty) if demand is not realized. We study different mechanisms--ranging from an advance commitment (capacity reservation) to no commitment (pay-as-you-go)--under demand uncertainty. We consider markets in which the demand for computing is uncertain and, moreover, users' value of computing and demand realization may be related. We show how the different levels of commitment affect prices, revenues, and resource utilization under different market conditions. Our results reiterate the need to address the availability-commitment dichotomy in the design of business models for on-demand computing and IT outsourcing. [ABSTRACT FROM AUTHOR]

This paper analyses bidder behaviour in the German photovoltaic (PV) auction pilot. It uses a novel approach combining insights from data analysis and decision theory to optimise an agent-based simulation model. We model both a uniform pricing (UP) scheme, a pay-as-bid (PAB) scheme, and a benchmark case, where agents adapt their bidding strategy. The findings are contrasted with empirical auction outcomes. The comparison shows that, especially in the early rounds, bid prices were above the costs--possibly due to uncertainties and false expectations concerning competition. This is particularly visible in the first round. Adapting their expectations to a higher competition level, bidders in the pay-as-bid simulation subsequently decrease their bids. From simulating a separate auction for arable land bidders, we see that this bidder type reduces support costs substantially and that an implicitly discriminatory auction yields more aggressive bids and can induce further cost reductions. [ABSTRACT FROM AUTHOR]

Building on recent research in social psychology, this paper analyzes the link between the precision of initial cash offers and mergers and acquisition (M&A) outcomes. About one‐half of the offers are made at the precision of one or five dollars per share, while an additional one‐third are made at the precision of a half dollar or one quarter. The practice of making offers at round price‐per‐share levels is associated with a higher purchase price for target shares and a lower probability of deal completion. [ABSTRACT FROM AUTHOR]

Analysis of standard auction rules when bidders are risk averse is usually carried out under the assumption that the seller is able to set an optimal reserve. The role of entry fees has been generally overlooked in that analysis. We consider bidders with constant absolute risk aversion and show that reserve price is an essential tool in the second price auction while entry fee is essential in the first price auction. Furthermore, setting a reserve price and entry fee combination optimally may change some of the rankings of the standard auctions that hold under optimal reserves. [ABSTRACT FROM AUTHOR]

This paper studies all‐pay auctions in which there is a buy‐price option for bidders to guarantee purchases at a seller‐specified price. We analyze symmetric increasing bidding equilibria in the first‐ and second‐price all‐pay auctions with the buy‐price option. While the optimal buy‐price in the second price is higher than are those in the first‐price all‐pay auction, both formats maintain the same expected profit. With an endogenous entry process, all‐pay auctions with the buy‐price can attract more consumers and ultimately reach a higher expected profit than does the uniform posted‐price selling mechanism. [ABSTRACT FROM AUTHOR]

In uniform price auctions, multiple prices are sustainable in equilibrium as a result of the market power of bidders. I show that low price equilibria are removed in a framework with asymmetric bidders who cannot anticipate the seller's rationing strategy. Attracting high cost bidders' participation in the auction induces the low cost bidders to bid more aggressively in order to eliminate the high cost bidders. Ex-post optimal equilibria with non-increasing demand schedules only exist when the seller is allowed to use any degree of rationing. [ABSTRACT FROM AUTHOR]

In a takeover contest, the presence of bidders' existing debtholders, if they can be expropriated by issuing new debt with equal or senior priority, allows bidders to commit to bid more than their valuation of the target. Such commitment can be beneficial because it deters potential entry by subsequent bidders and may allow a first bidder to acquire the target at a bargain price. The cost is that if entry by subsequent bidders does nevertheless take place, because the first bidder has committed himself to bid high premia, a bidding war ensues resulting in offers that may involve excessive premia, i.e., bids that are larger than the bidders' valuation of the target. [ABSTRACT FROM AUTHOR]

This paper reports the results of controlled experiments designed to test the Harris-Raviv generalization of the Vickrey theory of bidding in multiple unit discriminative auctions. The paper also discusses further development of the theory—in a way suggested by the experimental results—to include bidders with distinct risk preferences. [ABSTRACT FROM AUTHOR]

The almost exclusive concern for deciding bid prices has obscured the importance to bidding firms of adjusting other marketing variables. Taking the capacity to prepare bids as one example of these variables, the authors develop a procedure for calculating an optimum number of estimators. A new method is used for computing probabilities of success in bidding, based on the past dispersion of competitor prices. The dispersion is interpreted as reflecting different assessments of the best way to carry out the work required and not, as commonly assumed, a combination of errors in estimating one "true cost" plus differences in competitors' markups. Applied to a sample of firms, the procedure indicates that additional estimators would increase the expected profits for each firm. [ABSTRACT FROM AUTHOR]

Abstract In this study, a tradable permit mechanism for a car sharing system was proposed. Car sharing services that allow users to move freely decrease the efficiency of sharing vehicle use due to the uneven distribution of vehicles and origin-destination (OD) demands. Thus, a tradable permit mechanism and a solution algorithm were proposed to solve this problem in this study. First, the Vickrey–Clarke–Groves mechanism for car sharing was proposed. This mechanism allowed the tradable permit system to achieve both strategy-proofness and efficient allocation. The difference between the case of single-minded bidders and that of multiple bidders was subsequently discussed. A single-minded bidder is defined as an agent that only bids on one item and a multiple bidder is defined as an agent that bids on more than one item. The results indicated that the permit price was decomposed into the usage fee for leaving the origin sharing station and the income for arriving at the destination sharing station. Additionally, the findings indicated that the negative price of using mobility sharing could occur when there was high asymmetric imbalanced OD demand. The negative price (that is benefit) could encourage the natural relocation of vehicles under the auction mechanism. The framework was then extended to treating a round trip case. Finally, a solution algorithm for these problems was proposed, and numerical examples were presented. The results demonstrated that the problem setting and the solution algorithm were feasible from the computational time viewpoint. [ABSTRACT FROM AUTHOR]

Abstract: Uncertainty about ex post realized values is an inherent component in many auction environments. In this article, we develop a structural framework to analyze auction data subject to ex post uncertainty as a pure risk. We consider a low‐price sealed‐bid auction model with heterogeneous bidders' preferences and ex post uncertainty. The uncertainty can be common to all bidders or idiosyncratic. We derive the model restrictions and study nonparametric and semiparametric identification of the model primitives under exogenous and endogenous participation. We then develop multistep nonparametric and semiparametric estimation procedures in both cases. [ABSTRACT FROM AUTHOR]

I construct an informationally robust auction to sell a common‐value good. I examine the revenue guarantee of an auction over all information structures of bidders and all equilibria. As the number of bidders gets large, the revenue guarantee of my auction converges to the full surplus, regardless of how information changes as more bidders are added. My auction also maximizes the revenue guarantee when there is a single bidder. [ABSTRACT FROM AUTHOR]

We study a variation of the single-item sealed-bid first-price auction wherein one bidder (the leader) publicly commits to a (possibly mixed) strategy before the others submit their bids. For the case wherein all bidders’ valuations are commonly known, we fully characterize the committed mixed strategy that is optimal for the leader and find that both the leader and the follower with the highest valuation strictly benefit from the commitment, so long as the leader’s valuation is strictly higher than the second highest valuation of the followers. We further show that compared with the simultaneous first-price auction, the leader’s optimal commitment yields the same net utility benefit to both of these bidders. As a result, the two highest valued bidders’ incentives are aligned, facilitating coordination and implementation of the commitment. Finally, we provide characterization of the leader’s optimal commitment in a Bayesian setting with two bidders, leveraging the methodology developed for the complete-information setting. [ABSTRACT FROM AUTHOR]

Within an affiliated value auction setting, we study the relationship between the number of bidders and the winner’s curse in terms of its frequency of occurrence and its expected harm. From a design perspective, we find that both the number of bidders and the level of affiliation are instrumental when choosing an auction format and whether to encourage or discourage bidder participation. [ABSTRACT FROM AUTHOR]

The winner's curse in auctions might emerge from asymmetric information and/or from some willingness to pay for winning. This article is based on a sealed-bid common value first price auction, with a net loss for the subject with the second highest bid. The results show the existence of a trade-off between the magnitude of the potential loss and the willingness to pay for the victory. In the context of public procurement these results suggest that companies are willing to overpay small contracts to gain a sort of 'free advertising', whereas this is not the case when the contracts are large. [ABSTRACT FROM AUTHOR]

We study buyer-determined procurement auctions where both price and non-price characteristics of bidders matter for being awarded a contract. Although, in scoring auctions bidders perfectly know how price and non-price attributes determine the awarding of the contract, this remains uncertain in buyer-determined auctions where the buyer is free to choose once all bids have been submitted. We analyze the impact of information bidders have with respect to the buyer's awarding decision. As we show theoretically whether it is in the buyer's interest to conceal the impact of non-price characteristics depends on how important the quality aspects of the procured good are to the buyer: The more important quality aspects are, the more interesting concealment becomes. In a counterfactual analysis using data from a large European procurement platform, we analyze the reduction of non-price information available to the bidders. Confirming our hypothesis, for auction categories where bidders' non-price characteristics strongly influence buyers' decisions concealment of non-price information leads to an increase in buyers' surplus of up to 15% due to higher competitive pressure and lower bids. Conversely, for categories where bidders' non-price characteristics are of little importance concealment of non-price information leads to a decrease in buyers' surplus of up to 6%. [ABSTRACT FROM AUTHOR]

In this paper, we provide an alternative explanation for why auctioneers often keep the reserve price hidden or secret. We consider a standard independent private values environment in which the buyers are risk-averse and the seller has private information about her valuation of the object to be auctioned. The seller uses a first-price sealed-bid auction mechanism combined with either an announced reserve price or a hidden reserve price. We compare the seller's ex ante expected profits under these two policies and find that the optimal hidden reserve price policy generates higher expected profits for the seller when the buyers are fairly risk-averse under particular restrictions on buyers' preferences and the distributions of private values. As the number of the buyers increases, the hidden reserve price is more likely to dominate. Numerical methods are used to demonstrate the generality of our main results. [ABSTRACT FROM AUTHOR]

We introduce, test, and compare two auction-based methods for eliciting discount rates. In these 'patience auctions', participants bid the smallest future sum they would prefer -or- the longest time they would wait for a reward, rather than receive a smaller, immediate payoff. The most patient bidder receives the delayed reward; all others receive the immediate payoff. These auctions allow us to compare discounting when participants' attention is focused on the temporal versus monetary dimension of delayed rewards. We find that the estimated parameters in the three most commonly used discount functions (exponential, hyperbolic, and quasi-hyperbolic) differ across these two bidding methods (time-bids vs. money-bids). Specifically, our participants tend to show more impatience under time-bids. Furthermore, we find that people are more likely to exhibit exponential (as opposed to hyperbolic) discounting and exhibit less present bias under time-bids, compared to money-bids. To our knowledge, this paper is the first to directly compare time versus money preference elicitations, within the same subjects, using an incentive-compatible mechanism. [ABSTRACT FROM AUTHOR]