A Note on Buyers’ Behavior in Auctions with an Outside Option

In this note I show that the equilibrium in cutoff strategies observed in auctions with a buy-it-now price may also arise in markets where objects are sold simultaneously by auctions and posted prices. However, contrary to auctions with a buy-it-now price where buyers need to know only the total number of players in the market, in the latter environment buyers must also observe the number of active bidders in the auction for the equilibrium to exist in cutoff strategies.