Subject:
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Re: Methodology: Reserve, Controlled Reserve, or No Reserve?
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Newsgroups:
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lugnet.market.auction
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Date:
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Wed, 28 Apr 1999 20:08:06 GMT
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Viewed:
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574 times
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Derick Bulkley wrote:
>
> Question to all armchair economists/sociologists/game-theorists:
> (especially you, Todd ;-)
>
> From both the stand point of the buyer, and then the seller, what are your
> opinions of the following policies regarding secret reserve prices in auctions:
If an auction is held in a forum which attracts a reasonable number of
potential buyers, and runs for a reasonable amount of time, and the
minimum bid is set reasonably, a reserve should never be needed.
Ways in which I see a reserve as being reasonable:
- Someone is not sure they want to sell an item, if they get a big
enough
offer, they might be tempted.
In this case, sell the item through RTL or Lugnet. Indicate that if
you
get a good enough offer you will sell. Also state that if you get more
than one good offer, you will initiate an auction, then set the
minimum
bid at the highest offer you received, or at least something close to
it.
- In a forum (especially a charity forum) where there may be
insufficient buyers,
a reserve might be reasonable (and example is a fund raising auction
our church
holds where the usuall items are seats at dinners etc. Someone donated
a valuable
piece of jewelry, and requested a reserve be set on it. Only one or
two people were
interested and bidding did not reach the reserve. This was reasonable
(though I
think the minimum bid was set too low). In this kind of forum, it is
also reasonable
to request that the item not be offered for less than minimum bid (I
have seen fund
raising auctions where items had to be dropped a little in price to
get the bidding
started, almost always, bidding ended up well above the original
minumum)).
From this, my opinion is option 2 or 4 (preferably 4).
> 1) Reserve ok, whatever the seller chooses, goes.
>
> 2) Controlled reserve - the reserve price cannot exceed the opening bid by
> either $50 or 50%, whichever is greater.
>
> 3) Controlled Reserve: reserves are ok, but seller must state a "Value Range"
> that brackets the reserve. Sellers that state absurdly wide ranges would be
> advised to do otherwise.
>
> 4) No reserves whatsoever. If you insist on getting at least price X, then
> they must choose X as the minimum opening bid.
>
> Thanks very much for your input!
>
> Derick Bulkley
--
Frank Filz
-----------------------------
Work: mailto:ffilz@us.ibm.com
Home: mailto:ffilz@mindspring.com
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