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 First price sealed bid-write down bid on piece of paper, seal and mail it off. Communicated that to the auction. Everyone come Second Price sealed Bid. Person who wins pays the second highest bid. Revenue comes the same, Ebay is a second priced 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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