Unformatted text preview: Ascending bid auction-Dominant strategy to stay in until your value is reached. Ignore ties--won't matter Bidder with the highest value wins and pays the second highest value Second Price-bidding your value (truth-telling) is a dominant strategy [vickey-Nobel] Bidder i's value is Vi Bidder i's payoff Claim:optimal bid, bi* is vi Let b^=max others bids ---picture First bid- bid less than vi, How much less? depends. ..number of bidders. Lots of bidders closer to value. Ex: N bidders all have values in [0,1] drawn independently from uniform distribution. Optimal bid for vi is ((N-1)/N)Vi...
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- Spring '08
- Game Theory, Auction, bid, -Really high bid, bid=first price..you bid, bid auction-Dominant strategy