Deposit Requirements in Auctions

Please use this identifier to cite or link to this item: https://doi.org/10.1257/mic.20200206

Title:	Deposit Requirements in Auctions
Authors:	Che, Xiaogang Li, Tong Lu, Jingfeng Zheng, Xiaoyong
Issue Date:	1-Nov-2022
Publisher:	American Economic Association
Citation:	Che, Xiaogang, Li, Tong, Lu, Jingfeng, Zheng, Xiaoyong (2022-11-01). Deposit Requirements in Auctions. American Economic Journal: Microeconomics 14 (4) : 465-493. ScholarBank@NUS Repository. https://doi.org/10.1257/mic.20200206
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)
Source Title:	American Economic Journal: Microeconomics
URI:	https://scholarbank.nus.edu.sg/handle/10635/235798
ISSN:	1945-7669 1945-7685
DOI:	10.1257/mic.20200206
Appears in Collections:	Staff Publications Elements

File	Description	Size	Format	Access Settings	Version
AEJMicro-2020-0206.pdf		358.41 kB	Adobe PDF	OPEN	None	View/Download

Check