Baseball Model

Baseball Model - Model for MS&E 211 World Series Auction...

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Mark Peters, Yinyu Ye 1 October 3, 2007 1 Notation First, let’s describe the notation that we will be using to model the World Series Auction problem. We are studying a market with one organizer and n participants. There are S states of the world in the future on which the market participants are submitting bids for contingent claims. Each state represents one particular team winning the World Series (thus, S = 8 ). For each bid that is accepted by the organizer and which contains the realized future state, the organizer will pay the participant some ﬁxed amount of points w . In our case, w = 100 . The participants will submit bids to the organizer which specify the states which they want contingent claims over, the price at which they are willing to pay for the bid and the number of identical bids that they will buy. The organizer will decide to accept or reject each bid. If the bid is accepted, the organizer also decides the number of bids to accept and the price per bid to be collected from the participant. The market will be not be run as a continuous auction. Instead, the market organizer will collect

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This note was uploaded on 06/16/2010 for the course MS&E 211 taught by Professor Yinyuye during the Fall '07 term at Stanford.

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Baseball Model - Model for MS&E 211 World Series Auction...

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