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Title: Reserve Price Effects in Auctions: Estimates from Multiple RD Designs

Author(s): Syngjoo Choi, Lars Nesheim and Imran Rasul

Publication Date: March 2015

Keyword(s): auctions, regression discontinuity and reserve price

Programme Area(s): Industrial Organization

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 RD 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.

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Bibliographic Reference

Choi, S, Nesheim, L and Rasul, I. 2015. 'Reserve Price Effects in Auctions: Estimates from Multiple RD Designs'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10486