Editing Auction (section)

===Reserve price===

A [[No-reserve auction]] (NR), also known as an ''absolute auction'', is an auction in which the item for sale will be sold regardless of price.<ref name="Fisher">{{Citation |last1= Fisher |first1= Steven |title= The Real Estate Investor's Handbook: The Complete Guide for the Individual Investor |url= https://archive.org/details/realestateinvest00fish/page/89 |year= 2006 |publisher= Atlantic Publishing Company |location= [[Ocala, Florida]] |isbn= 978-0-910627-69-6 |pages= [https://archive.org/details/realestateinvest00fish/page/89 89–90] |url-access= registration }}</ref><ref name="AuctionBasics">{{Citation |last1= Good |first1= Steven L. |author2= Lynn, Paul A. |date= January 2007 |title= The eBay Effect |journal= Commercial Investment Real Estate |publisher= [[Certified Commercial Investment Member|CCIM Institute]] |url= http://www.ciremagazine.com/article.php?article_id=1036 |access-date= 2009-06-25 |archive-url= https://web.archive.org/web/20101031004055/http://ciremagazine.com/article.php?article_id=1036 |archive-date= 2010-10-31 }}</ref> From the seller's perspective, advertising an auction as having no [[Reservation price|reserve price]] can be desirable because it potentially attracts a greater number of bidders due to the possibility of a bargain.<ref name="Fisher" /> If more bidders attend the auction, a higher price might ultimately be achieved because of heightened competition from bidders.<ref name="AuctionBasics" /> This contrasts with a ''reserve auction'', where the item for sale may not be sold if the final bid is not high enough to satisfy the seller. In practice, an auction advertised as "absolute" or "no-reserve" may nonetheless still not sell to the highest bidder on the day, for example, if the seller withdraws the item from the auction or extends the auction period indefinitely,<ref name="Leichman">{{Citation|title= 90% off! real estate |last1= Leichman |first1= Laurence |year= 1996 |publisher= Leichman Assoc Pubns |location= [[Ocala, Florida]] |isbn= 978-0-9636867-7-0 |pages= 78–79 }}</ref> although these practices may be restricted by law in some jurisdictions or under the terms of sale available from the auctioneer.

A '''reserve auction''' is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller; that is, the seller ''reserves'' the right to accept or reject the highest bid.<ref name="AuctionBasics" /> In these cases, a set 'reserve' price known to the auctioneer, but not necessarily to the bidders, may have been set, below which the item may not be sold.<ref name="Fisher" /> If the seller announces to the bidders the reserve price, it is a public reserve price auction.<ref>{{Cite journal |last1= Riley |first1= J.G.|last2 = Samuelson|first2=W.F. |title= Optimal Auctions. |year= 1981 |journal = The American Economic Review| volume = 71 | pages =  381–392|url = http://www.eecs.harvard.edu/cs286r/courses/spring05/0-150a.pdf}}</ref>  In contrast, if the seller does not announce the reserve price before the sale, it is a secret reserve price auction.<ref>
 {{Cite journal |last1= Elyakime |first1= B.|last2 = Laffont |first2=J.J. |last3=Loisel |first3=P.|last4 = Vuong |first4 = Q. |title= First-Price Sealed-Bid Auctions with Secret Reservation Prices. |year= 1994 |journal = Annales d'Économie et de Statistique | volume = 34 |issue= 34| pages =  115–141 |doi= 10.2307/20075949|jstor =20075949 }}</ref> However, potential bidders may be able to deduce an approximate reserve price, if one exists at all, from any estimate given in advance by the auction house. The reserve price may be ''fixed'' or ''discretionary''. In the latter case, the decision to accept a bid is deferred to the auctioneer, who may accept a bid that is marginally below it. A reserve auction is safer for the seller than a no-reserve auction as they are not required to accept a low bid, but this could result in a lower final price if less interest is generated in the sale.<ref name="AuctionBasics" />