9781118041581

Bidder Strategies 677 It is also interesting to compare the Dutch auction and the sealed-bid auc- tion. In the latter, buyers su ...

As an example, consider a typical sealed-bid auction—say, for a small sub- urban office building expected to receive bids from t ...

Bidder Strategies 679 steadily with its bid. Looking at the last column of the table, we see that the firm’s expected profit is ...

A useful way to arrive at the BCB distribution is to begin by assessing the dis- tribution for a typicalcompeting bid. For insta ...

Bidder Strategies 681 is that each competitor’s bid will be somewhere between the limits $300 thousand and $340 thousand, with a ...

A key point is the significant element of interdependenceamong bidding strategies. As we saw earlier, one firm’s optimal bid dep ...

Bidder Strategies 683 Let’s check that this strategy constitutes an equilibrium. Consider a typical firm (say, firm 1) whose exp ...

value. Holding vi$348 thousand, the firm bids $324 thousand when it is one of two bidders, but $342 thousand when it is one of ...

Bidder Strategies 685 and $360 thousand. Here, the common equilibrium bidding strategy is bi (1/3)(300) (2/3)vi. In turn, comp ...

probably overestimated the true value. Put another way, conditional on winning the auction, the buyer should figure the item’s t ...

Optimal Auctions 687 to its original estimate. Against more rivals, the buyer should bid more con- servatively, not more aggress ...

This important proposition is called the revenue equivalence theorem. We already know that (1) the English and Vickrey auctions ...

Optimal Auctions 689 L12 n  1n  1 U E(v2nd)E(vmax) n  1 n  1 n n  1 FIGURE 16.3 Expected Prices When Buyer Values Are Unifo ...

because each buyer can observe roughly the price levels at which rivals drop out of the bidding, and this provides indirect info ...

Optimal Auctions 691 reserve price, the good is withdrawn from sale.^16 A reserve price serves two related purposes: It protects ...

bidders are still able to earn positive profits on average. Overbidding in sealed- bid auctions is even more pronounced. With a ...

Optimal Auctions 693 empirical evidence suggests that this uniform price procedure (analogous to a second-price auction) has sli ...

where c is the ultimate cost of the procurement (unknown at the time the contract is signed). The remaining three variables are ...

Optimal Auctions 695 on a number of factors: intrinsic interest in the various events and athletes and whether the telecast is l ...

its bid to $401 million; its rivals had increased theirs by a token few million. Conditional on its winning the bidding (and giv ...