Optimal Reserve Price Design of Multi-Unit Online Auctions

Based on an independent private value model, this paper consideres that the bidders arrive with an non-homogeneous Poisson process, consideres costs such as the display fees generated by the auction website, commissions expense and advertising expense and investigates the optimal reserve price design for homogeneous multi-unit online auction. The reserve price strategies are categorized into three types no setting reserve price, opening reserve price and hiding reserve price. This paper also examines two cases where the number of bidders arriving is greater than and not more than the number of auction items establishing the expected revenue model of auctioneers under different strategies. Through the analysis of the model, the general conclusion is obtained: when the auction website user base is limited or the number of bidders arriving is not particularly large, hiding reserve price is a dominant strategy for an auctioneer; when the auction website has a particularly good user base or the number of bidders arriving is particularly large, the strategy of opening and hiding reserve price is equivalent; the optimal strategy of both cases is not to set the reserve price.