Optimal advertising of auctions (Q654533)

The paper analyses a symmetric independent private values auction model where a revenue-maximising seller faces a cost, which may be thought as an advertising cost, and relates to the number of bidders that the seller wants to make familiar with the object to be auctioned. More specifically, the paper focuses on the number of bidders that the seller chooses to attract compared to the socially optimal number, and shows that if the distribution of valuations has an increasing failure rate, the seller over-advertises the auction and vice versa.