Vickrey Auctions with Reserve Pricing

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Date
2004-04Author
Ausubel, Lawrence M.
Cramton, Peter
Citation
"Vickrey Auctions with Reserve Pricing," (with Lawrence M. Ausubel) Economic Theory, 23, 493-505, April 2004. Reprinted in Charalambos Aliprantis, et al. (eds.), Assets, Beliefs, and Equilibria in Economic Dynamics, Berlin: Springer-Verlag, 355-368, 2003.
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We generalize the Vickrey auction to allow for reserve pricing in a multi-unit auction with
interdependent values. In the Vickrey auction with reserve pricing, the seller determines the quantity to be
made available as a function of the bidders’ reports of private information, and then efficiently allocates
this quantity among the bidders. Truthful bidding is a dominant strategy with private values and an ex
post equilibrium with interdependent values. If the auction is followed by resale, then truthful bidding
remains an equilibrium in the auction-plus-resale game. In settings with perfect resale, the Vickrey
auction with reserve pricing maximizes seller revenues.