Week 11 Lecture_Auction

Week 11 Lecture_Auction - Week 11 Auction...

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Week 11 Auction
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Ways in which trades are  conducted Take-it-or-leave-it offer Bargaining Oligopoly price offers Auction Google’s ads, Treasury bills, Ebay,  Houses, Supply contracts, Spectrum Limited supply Auctions can recover information from the  potential buyers
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Auction Rules 1. Sealed bid (simultaneous) v.s. Open  (sequential) 2. How is winner determined? 3. How much a winner pays? 4. How much a loser pays?
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Questions 1. Which auction format gives the highest  expected profit to the seller? 2. Which auction format is the most efficient? Given an auction format, what outcome will  appear?
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Sealed Bid Auctions Auction off $50. Write your bid on a piece of paper. The winner is the highest bidder. Ties are  broken by a coin toss. The winner pays the bid. (“first-price auction”)
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Common value auction Known common value: v. The Nash Equilibrium prediction: Some bidders bid the common value v, and  some bidders give up and bid less.
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Private value auction Still first price auction. Your value is v > 0, and you do not know  others’ value. How much should you bid? Compare v i  and v i /2.  Eqm: everyone  shades the bid  by an amount  that depends on his/her belief of other’s  values.
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Winner pays the second highest price. Auction off 
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This note was uploaded on 12/08/2010 for the course ECON ECON 2101 taught by Professor Titi during the Spring '10 term at HKU.

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Week 11 Lecture_Auction - Week 11 Auction...

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