Problem_Session_10_Review

Problem_Session_10_Review - MS&E 352 Decision Analysis...

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MS&E 352 Decision Analysis II Problem Session 9
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Announcements Final Exam: Make sure that you understand all the tools and concepts from the class before the final (specifically CS3). The exam will be posted on Thursday, March 12 th , and due on Thursday, March 19 nd . No More Questions on Coursework: Good luck in the Final
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On our agenda for today… Auctions & Bidding Decision Analysis Cycle & Tools Survey Questions
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Auctions & Bidding
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Auctions involve some interesting and challenging decision problems. When there is no definitive market price for the object they are trying to sell. Can you imagine someone who would be trying to sell rice on eBay? When do people resort to auctions?
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We studied 4 types of auctions, and their associated optimal strategies. 1 st price sealed bid 2 nd price sealed bid 1 st price, descending bidding 1 st price open ascending Auction Type Optimal Strategy PIBP – some amount b PIBP PIBP – some amount b Bid up to your PIBP
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We studied 4 types of auctions, and their associated optimal strategies. 1 st price sealed bid 2 nd price sealed bid 1 st price, descending bidding 1 st price open ascending Auction Type Optimal Strategy PIBP – some amount b PIBP Bid up to your PIBP Auctions 1 and 3 are similar. Also – they are the challenging ones! ?
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Here is our Decision Diagram… Bid Underlying Uncertainty Max Competitive Bid Acquire $
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Proba to Acquire vs. Bid Amount 0.000 0.200 0.400 0.600 0.800 1.000 1.200 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100. Here are the essential components of our model. .. φ denotes the long-term fraction of H when tossing the thumbtack. - -> Δ CDF(φ) PDF(φ) {φєΔ}*φ^2 {φєΔ}*(1-φ)^2 The proba density on φ is assumed to be Beta, with the fol owing parameters: Unfold to 0.0 0 0.0 0 0.00 0.0 0 0.00 reveal 0.0 5 0.0 0 0.00 0.0 0 0.00 CDF and 0.010 0.0 0 0.00 0.0 0 0.00 PDF on φ 0.015 0.0 0 0.00 0.0 0 0.00 0.020 0.0 0 0.00 0.0 0 0.00 0.025 0.0 0 0.00 0.0 0 0.00 0.030 0.0 0 0.00 0.0 0 0.00 0.035 0.0 0 0.00 0.0 0 0.00 {H | &} 0.700 0.040 0.0 0 0.00 0.0 0 0.00 {HH | &} 0.497 0.045 0.0 0 0.00 0.0 0 0.00 {TT | &} 0.092 0.050 0.0 0 0.00 0.0 0 0.00 0.05 0.0 0 0.00 0.0 0 0.00 0.060 0.0 0 0.00 0.0 0 0.00 0.065 0.0 0 0.00 0.0 0 0.00 0.070 0.0 0 0.00 0.0 0 0.00 0.075 0.0 0 0.00 0.0 0 0.00 0.080 0.0 0 0.00 0.0 0 0.00 0.085 0.0 0 0.00 0.0 0 0.00 0.090 0.0 0 0.00 0.0 0 0.00 0.095 0.0 0 0.00 0.0 0 0.00 0.10 0.0 0 0.00 0.0 0 0.00 0.105 0.0 0 0.00 0.0 0 0.00 0.1 0 0.0 0 0.00 0.0 0 0.00 0.1 5 0.0 0 0.00 0.0 0 0.00 0.120 0.0 0 0.00 0.0 0 0.00 0.125 0.0 0 0.00 0.0 0 0.00 0.130 0.0 0 0.00 0.0 0 0.00 0.135 0.0 0 0.00 0.0 0 0.00 0.140 0.0 0 0.00 0.0 0 0.00 0.145 0.0 0 0.00 0.0 0 0.00 0.150 0.0 0 0.00 0.0 0 0.00 0.15 0.0 0 0.00 0.0 0 0.00 0.160 0.0 0 0.00 0.0 0 0.00 0.165 0.0 0 0.00 0.0 0 0.00 0.170 0.0 0 0.00 0.0 0 0.00 0.175 0.0 0 0.00 0.0 0 0.00 0.180 0.0 0 0.00 0.0 0 0.00 0.185 0.0 0 0.00 0.0 0 0.00 0.190 0.0 0 0.00 0.0 0 0.00 0.195 0.0 0 0.00 0.0 0 0.00 0.20 0.0 0 0.00 0.0 0 0.00 0.205 0.0 0 0.00 0.0 0 0.00 PDF(φ) 0.0 0 1.0 0 2.0 0 3.0 0 4.0 0 5.0 0 6.0 0 7.0 0 8.0 0 0.0 0 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.0 0 C denotes the highest competitive bid. - -> The proba density on C is assumed to be Beta, with the fol owing parameters: Unfold to $0.0 0.000 0.000 reveal $0.5 0.000 0.000 CDF and $1.0 0.000 0.000 r n PDF on C $1.5 0.000 0.000 18 35 $2.0 0.000 0.000 $2.5 0.000 0.000 $3.0 0.000 0.000 $3.5 0.000 0.000 $4.0 0.000 0.000 $4.5 0.000 0.000 $5.0 0.000 0.000 $5.5 0.000 0.000 $6.0 0.000 0.000 $6.5 0.000 0.000 $7.0 0.000 0.000 $7.5 0.000 0.000 $8.0 0.000 0.000 $8.5 0.000 0.000 $9.0 0.000 0.000 $9.5 0.000 0.000 $10.0 0.000 0.000 $10.5 0.000 0.000 $11.0 0.000 0.000 $11.5 0.000 0.000 $12.0 0.000 0.000 $12.5 0.000 0.000 $13.0 0.000 0.000 $13.5 0.000 0.000 $14.0 0.000 0.000 $14.5 0.000 0.000 $15.0 0.000 0.000 $15.5 0.000 0.000 $16.0 0.000 0.000 $16.5 0.000 0.000 $17.0 0.000 0.000 $17.5 0.000 0.000 $18.0 0.000 0.000 $18.5 0.000 0.000 $19.0 0.000 0.000 $19.5 0.000 0.000 $20.0 0.000 0.000 $20.5 0.000 0.000 PDF(C) 0.000 0.005 0.010 0.015 0.020 0.025 0.030 0.035 0.040 0.045 0.050 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.
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This note was uploaded on 06/16/2010 for the course MS&E 352 taught by Professor Ronhoward during the Winter '09 term at Stanford.

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Problem_Session_10_Review - MS&E 352 Decision Analysis...

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