what is a reserve in an auction

In an auction, a reserve is the minimum price that a seller is willing to accept for an item. The reserve price is intended to protect the owner of the auctioned item from an unfavorable outcome, such as accidentally selling the item below its worth. In a reserve auction, the seller is only obligated to sell the item if the bid amount meets or exceeds their reserve price. This contrasts with a no-reserve auction, also known as an absolute auction, in which the item for sale will be sold regardless of price. In a no-reserve auction, there cant be a minimum bid, and neither can the seller withdraw the item from the auction or extend the auction period indefinitely. The benefit of a no-reserve auction is that it can potentially attract a greater number of bidders due to the possibility of a bargain, which can ultimately lead to a higher price due to heightened competition from bidders. However, in practice, an auction advertised as "absolute" or "no-reserve" may 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.