Optimal advertising of auctions |
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Authors: | Nora Szech |
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Affiliation: | Economic Theory II, University of Bonn, Lennéstr. 37, 53113 Bonn, Germany |
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Abstract: | We study a symmetric independent private values auction model where the revenue-maximizing seller faces a cost cn of attracting n bidders to the auction. If the distribution of valuations possesses an increasing failure rate (IFR), the seller overinvests in attracting bidders compared to the social optimum. Conversely, if the distribution is DFR, the seller underinvests compared to the social optimum. If the distribution of valuations becomes more dispersed, both, a revenue- and a welfare-maximizing seller, attract more bidders. |
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Keywords: | JEL classification: D44 |
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