Public Versus Secret Reserve Prices in Ebay Auctions: Results from a Pokemon Field Experiment

32 Pages Posted: 24 Mar 2001 Last revised: 12 Nov 2022

See all articles by Rama Katkar

Rama Katkar

Morgan Stanley

David Reiley

Pandora Media, Inc.; UC Berkeley School of Information

Date Written: March 2001

Abstract

Sellers in eBay auctions have the opportunity to choose both a public minimum bid amount and a secret reserve price. We ask, empirically, whether the seller is made better or worse off by setting a secret reserve above a low minimum bid, versus the option of making the reserve public by using it as the minimum bid level. In a field experiment, we auction 50 matched pairs of Pok‚mon cards on eBay, half with secret reserves and half with equivalently high public minimum bids. We find that secret reserve prices make us worse off as sellers, by reducing the probability of the auction resulting in a sale, deterring serious bidders from entering the auction, and lowering the expected transaction price of the auction. We also present evidence that some sellers choose to use secret reserve prices for reasons other than increasing their expected auction prices.

Suggested Citation

Katkar, Rama and Reiley, David H., Public Versus Secret Reserve Prices in Ebay Auctions: Results from a Pokemon Field Experiment (March 2001). NBER Working Paper No. w8183, Available at SSRN: https://ssrn.com/abstract=264437

Rama Katkar (Contact Author)

Morgan Stanley ( email )

1585 Broadway
New York, NY 10036
United States

David H. Reiley

Pandora Media, Inc. ( email )

2101 WEBSTER ST 16TH FLOOR
Oakland, CA 94612
United States

UC Berkeley School of Information ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

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