Economics Game Theory In Behavioral Economics Questions
Reserve prices play a crucial role in auction theory as they represent the minimum price at which a seller is willing to sell the item being auctioned. These reserve prices influence auction outcomes by setting a threshold that potential buyers must meet or exceed in order for the auction to be successful. If the highest bid does not reach the reserve price, the item remains unsold. On the other hand, if the highest bid surpasses the reserve price, the item is sold to the highest bidder. Reserve prices can impact auction outcomes by affecting bidder behavior, competition levels, and the final price achieved.