Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

2 Issues per year

IMPACT FACTOR 2016: 0.229
5-year IMPACT FACTOR: 0.271

CiteScore 2016: 0.30

SCImago Journal Rank (SJR) 2016: 0.398
Source Normalized Impact per Paper (SNIP) 2016: 0.232

Mathematical Citation Quotient (MCQ) 2016: 0.08

See all formats and pricing
More options …

Price Reveal Auctions

Andrea Gallice
  • Corresponding author
  • ESOMAS Department, University of Turin, Torino, Italy
  • Collegio Carlo Alberto, Via Real Collegio 30 Moncalieri, Italy
  • Email:
Published Online: 2016-01-12 | DOI: https://doi.org/10.1515/bejte-2014-0099


A price reveal auction (PRA) is a descending price auction in which the current price of the item on sale is hidden. Buyers can privately observe the price only by paying a fee, and every time an agent does so, the price falls by a predetermined amount. We show that if the number of participants, n, is common knowledge, then in equilibrium a PRA replicates the outcome of a posted price mechanism. In particular, at most one buyer observes the price and the auction immediately finishes. In contrast, multiple entries can occur and profitability is enhanced when agents are uncertain about n. Under some conditions, a PRA may even yield higher expected revenues than standard auction formats.

Keywords: price reveal auctions; pay-per-bid auctions; endogenous price decrease

JEL: D44; C72


  • Augenblick, N. forthcoming. “The Sunk-Cost Fallacy in Penny Auctions.” Review of Economic Studies.Google Scholar

  • Blumrosen, L., and T. Holenstein. 2008. “Posted Prices vs. Negotiations: An Asymptotic Analysis.” Proceedings of the Tenth ACM Conference on Electronic Commerce.Google Scholar

  • Di Gaetano, L. 2011. “A Model of Descending Auction with Hidden Starting Price and Endogenous Price Decrease.” MPRA Paper 35773.Google Scholar

  • Eichberger, J., and D. Vinogradov. 2008. “Least Unmatched Price Auctions: A First Approach.” Discussion Paper No. 471. Department of Economics, University of Heidelberg.Google Scholar

  • Engers, M., and B. McManus. 2007. “Charity Auctions.” International Economic Review 48:953–94.CrossrefWeb of ScienceGoogle Scholar

  • Gabaix, X., and D. Laibson. 2006. “Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets.” The Quarterly Journal of Economics 121:505–40.CrossrefGoogle Scholar

  • Gallice, A. 2009. “Lowest Unique Bid Auctions with Signals.” Carlo Alberto Notebooks No. 112. Collegio Carlo Alberto.Google Scholar

  • Gallice, A. 2010. “Price Reveal Auctions on the Internet.” Carlo Alberto Notebooks No. 147. Collegio Carlo Alberto.Google Scholar

  • Gallice, A., and G. Sorrenti. 2015. “Curious about the Price? Bidding Behavior in Price Reveal Auctions.” Carlo Alberto Notebooks No. 432. Collegio Carlo Alberto.Google Scholar

  • Gnutzmann, H. 2014. “Of Pennies and Prospects: Understanding Behaviour in Penny Auctions.” Mimeo.Google Scholar

  • Hinnosaar, T. 2014. “Penny Auctions.” Mimeo.Web of ScienceGoogle Scholar

  • Houba, H., D. van der Laan, and D. Veldhuizen. 2011. “Endogenous Entry in Lowest-Unique Sealed-Bid Auctions.” Theory and Decision 71:269–95.CrossrefGoogle Scholar

  • Krishna, V. 2002. Auction Theory. San Diego: Academic Press.Google Scholar

  • Morgan, J. 2000. “Financing Public Goods By Means Of Lotteries.” Review of Economic Studies 67:761–84.CrossrefGoogle Scholar

  • Myerson, R. 1981. “Optimal Auction Design.” Mathematics of Operations Research 6:58–73.CrossrefGoogle Scholar

  • Östling, R., J. T. Wang, E. Chou, and C. F. Camerer. 2011. “Testing Game Theory in the Field: Swedish LUPI Lottery Games.” American Economic Journal: Microeconomics 3:1–33.Google Scholar

  • Platt, B. C., J. Price, and H. Tappen. 2013. “The Role of Risk Preferences in Pay-to-Bid Auctions.” Management Science 59:2117–34.Web of ScienceCrossrefGoogle Scholar

  • Rapoport, A., H. Otsubo, B. Kim, and W. E. Stein. 2009. “Unique Bid Auction Games.” Jena Economic Research Paper 2009–005. Friedrich Schiller University Jena.Google Scholar

  • Raviv, Y., and G. Virag. 2009. “Gambling by Auctions.” International Journal of Industrial Organization 27:369–78.CrossrefWeb of ScienceGoogle Scholar

  • Scarsini, M., E. Solan, and N. Vieille. 2010. “Lowest Unique Bid Auctions.” ArXiv 1007:4264v1.Web of ScienceGoogle Scholar

  • Shubik, M. 1971. “The Dollar Auction Game: A Paradox in Noncooperative Behavior and Escalation.” Journal of Conflict Resolution 15:109–11.CrossrefGoogle Scholar

  • Wang, R. 1993. “Auctions Versus Posted-Price Selling.” American Economic Review 83:838–51.Google Scholar

About the article

Published Online: 2016-01-12

Published in Print: 2016-06-01

Citation Information: The B.E. Journal of Theoretical Economics, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2014-0099.

Export Citation

©2016 by De Gruyter. Copyright Clearance Center

Comments (0)

Please log in or register to comment.
Log in