Note on ‘guarantees in auctions: The auction house as negotiator and managerial decision maker’

Note on ‘guarantees in auctions: The auction house as negotiator and managerial decision maker’

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Article ID: iaor20032168
Country: United States
Volume: 48
Issue: 12
Start Page Number: 1640
End Page Number: 1644
Publication Date: Dec 2002
Journal: Management Science
Authors: , , , ,
Keywords: auctions
Abstract:

In this note, we identify two errors in Greenleaf, Rao, and Sinha's analysis of negotiation of guarantees in auctions. This note provides a high-level but self-contained summary of the revised results. We find that, in constrast with the earlier claim, guaranteed auctions lead to greater total expected revenue than conventional auctions. The ability to bargain over guarantee values and commissions certainly benefits sellers but may hurt the profits of auction houses. We relate these results to recent events in auction markets.

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