The odds of success in creative industries like the book, music or movie industry are often said to be particularly low. A 1763 rule by Denis Diderot, for example, says that only one out of ten published books is a commercial success. Yet, representative evidence on new-product success rates and...

This note provides a simple explanation why sellers rarely set optimal reserve prices in one-shot auctions. In a standard sealed-bid second-price auction, bidders with private values do not bid truthfully if the seller cannot commit to her announced reserve price. Consequently, expected revenue...