09-13 - Ascending bid auction-Dominant strategy to stay in...

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Sheet1 Page 1 Auctions-Ascending Bid (English). The person who bids the most wins the good. Descending Bid (Dutch)-Really high bid, starts high, then puts it lower and keeps going lower until someone raises their hand t h First price sealed bid-write down bid on piece of paper, seal and mail it off. Communicated that to the auction. Everyone come s Second Price sealed Bid. Person who wins pays the second highest bid. Revenue comes the same, Ebay is a second priced a Single object-bidder's value are private, what you think its worth to you. private value is independent to you. Descending bid=first price. .you bid more than anyone else.
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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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