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Unformatted text preview: Chapter 12 Appendix Below are brief descriptions and instructions for the experiments used in this course. In each instance I use the following notation: v = your value b = your bid B = the highest bid among everyone else r = reserve price c = entry fee Experiment 1 : 2bidder, secondprice auction with no entry fee and no reserve price. 10 rounds without feedback. Auction Environment Each bidder has a private value which is determined by a random draw from the set of money values between $0.00 and $100.00. You are told your own value before you bid. You do not know the other bidder’s value, but you do know that it is some amount between $0.00 and $100.00 and that all money values in this range are equally likely. Auction Rules If b < B you do not win the auction and your payoff is 0. If b > B , then you win the auction and receive the payoff v B . If b = B , then the auction ends in a tie. In this case, one of the highest bidders (possibly you) is selected at random to be the winner and receives the payoff v B . Notes: If you bid b > v , then it is possible that you will win the auction, but that v B < . That is, you could receive a negative payoff. 63 64 CHAPTER 12. APPENDIX Experiment 2 : 5bidder, secondprice auction with no entry fee and no reserve price. 10 rounds without feedback. The auction environment and rules are identical to Experiment 1. The only difference is that there are five bidders in the auction (four other bidders plus yourself) rather than two. Experiment 3 : 2bidder, secondprice auction with no entry fee and $50 re serve price. 10 rounds without feedback. Auction Environment Each bidder has a private value which is determined by a random draw from the set of money values between $0.00 and $100.00. You are told your own value before you bid. You do not know the other bidder’s value, but you do know that it is some amount between $0.00 and $100.00 and that all money values in this range are equally likely. There is a reserve price r = $50 . 00. This means that the object is only sold at auction if the highest bid is greater than or equal to $50.00....
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 Fall '09
 GARRATT
 Auction, payoﬀ

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