Open outcry auctions with secret reserve prices: an empirical application to executive auctions of tenant ownerʹs apartments in Sweden

This paper considers an open outcry auction with a secret reserve price within the independent private-values paradigm. The theoretical model is mapped into an econometric specification and the distribution of private values is estimated. The objective is to quantify the sellerʹs expected profit from moving to a mechanism where the reserve price is announced. Simulations indicate that the sellerʹs revenue is about 10% higher if a reserve price is announced.