Secret reserve prices in auctions drive up prices and maximize seller revenue.
The article explores how sellers in auctions use a mix of bidding and bargaining to get the best price for their items. By setting a secret minimum price, sellers can encourage bidders to keep bidding until they reach a certain level. This strategy can lead to repeated listings of similar items and ultimately result in higher sale prices. The study sheds light on why sellers on platforms like Ebay use these tactics and how they can benefit from them.