Week 11 Lecture_Auction

Week 11 Lecture_Auction - Week 11 Auction conducted...

Info icon This preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Week 11 Auction
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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
Image of page 2
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?
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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?
Image of page 4
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”)
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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.
Image of page 6
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.
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Second price auction Winner pays the second highest price.
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern