Experimental economics, summary paper Essay Example | Topics and Well Written Essays - 500 words

Experimental economics, summary paper - Essay ExampleThe people program line do not know the reserve price. Another rule is that the seller cannot bid on himself to avoid prices going up artificially. This practice is unethical and illegal. No auction house that values its reputation and the long run profits its reputation secures would systematically engage in this practice (Ashenfelter). The fact that reserve prices atomic number 18 kept secret is considered by many an illogical tactic. This occurs because the most dominant strategy used is to bid up in regards to the true valuation of the tendency which makes the optimal reserve price identical irrelevant of the reserve price being known or kept a secret. Another variable that must(prenominal) be considered in the English auction system is buy-in rates. Sometimes buy-in rates are high despite the fact that the reserve price is also high. These types of sellers are looking to maximize their profit both in terms of final pric e and buy-in revenues. Auctions that are able to get a lot of bidders to buy-in generate great profits than places with few bidders participating in the game. Low turnout of bidders is an undesirable marketplace. When this occurs many sellers prefer to take their items off the market temporarily to protect themselves against collusion from the buyers in an attempt to depress the price. The highest bidding in an auction is only accepted if the bid ends up exceeding the reserve price.