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.
Authors
cemmap co-Director University College London
Lars Nesheim is a Professor of Economics at UCL and Co-Director of the Centre for Microdata Methods and Practice (cemmap).
CPP Director, IFS Research Director
Imran is Professor of Economics at University College London and Director of the Centre for the Microeconomic Analysis of Public Policy at the IFS.
Syngjoo Choi
Journal article details
- DOI
- 10.1111/ecin.12226
- Publisher
- Wiley
- JEL
- D44, L11, L62
- Issue
- Volume 54, Issue 1, January 2016
Suggested citation
S, Choi and L, Nesheim and I, Rasul. (2016). 'Reserve price effects in auctions: estimates from multiple regression-discontinuity designs' 54(1/2016)
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