Price Reveal Auctions

What is it about?

I study the issues of entry and profitability of a recent online selling mechanism, the so called price reveal auction. A price reveal auction is a descending price auction in which the current price of the item on sale is hidden. Buyers can privately observe the price only by paying a fee, and every time an agent does so, the price falls by a predetermined amount. The auction closes when someone decides to buy the item at the price that he discovers. I show that under some conditions, a price reval auction may yield higher expected revenues with respect to standard auction formats.

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