Optimal auction reserve prices rise with more bidders, maximizing seller profits.
The article explores how reserve prices in auctions act as reference points for bidders. The researchers studied different types of auctions where bidders have a specific price in mind as a reference point. Surprisingly, the optimal reserve price set by the seller increases as the number of bidders goes up. Even if bidders don't mind paying slightly more than the reserve price, having more bidders can significantly impact the optimal reserve price.