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Author: Bernhard Kasberger
Publisher:
ISBN:
Category :
Languages : en
Pages : 65
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Book Description
We show how to bid in first-price auctions when a bidder knows her own value but not how others will bid. To do this we introduce a novel and general method for how to make choices in strategic settings without assuming common knowledge or equilibrium behavior. Accordingly, first eliminate environments that are believed not to occur and then find a robust rule that performs well in the remaining environments. We test our bid recommendations using data from laboratory experiments and from the field. We find that our bids outperform those made by the real bidders.
Author: Bernhard Kasberger
Publisher:
ISBN:
Category :
Languages : en
Pages : 65
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Book Description
We show how to bid in first-price auctions when a bidder knows her own value but not how others will bid. To do this we introduce a novel and general method for how to make choices in strategic settings without assuming common knowledge or equilibrium behavior. Accordingly, first eliminate environments that are believed not to occur and then find a robust rule that performs well in the remaining environments. We test our bid recommendations using data from laboratory experiments and from the field. We find that our bids outperform those made by the real bidders.
Author: Sarah Auster
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Dirk Bergemann
Publisher:
ISBN:
Category : Auction theory
Languages : en
Pages : 59
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Book Description
We explore the impact of private information in sealed bid first price auctions. For a given symmetric and arbitrarily correlated prior distribution over values, we characterize the lowest winning bid distribution that can arise across all information structures and equilibria. The information and equilibrium attaining this minimum leave bidders uncertain whether they will win or lose and indifferent between their equilibrium bids and all higher bids. Our results provide lower bounds for bids and revenue with asymmetric distributions over values.We report further analytic and computational characterizations of revenue and bidder surplus including upper bounds on revenue. Our work has implications for the identification of value distributions from winning bid data and for the informationally robust comparison of alternative bidding mechanisms.
Author: Chulyoung Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We consider a scenario where a single indivisible object is auctioned off to three bidders and among the three bidders there is one bidder whose winning imposes a positive or negative externality on the other two bidders. We theoretically and experimentally compare two standard sealed-bid auction formats, first-price and second-price auctions, under complete information. Using a refinement of undominated Nash equilibria, we analyze equilibrium bids and outcomes in the two auction formats. Our experimental results show that overbidding relative to equilibrium bids is prevalent, especially in second-price auctions, and this leads to higher revenue and lower efficiency in second- price auctions than in first-price auctions, especially under negative externalities. Our results are consistent with previous experimental findings that bidders tend to overbid more in second-price auctions than in first-price auctions, and they suggest that such a tendency is robust to the introduction of externalities.
Author: John H. Kagel
Publisher: Princeton University Press
ISBN: 1400830133
Category : Business & Economics
Languages : en
Pages : 424
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Book Description
An invaluable account of how auctions workâand how to make them work Few forms of market exchange intrigue economists as do auctions, whose theoretical and practical implications are enormous. John Kagel and Dan Levin, complementing their own distinguished research with papers written with other specialists, provide a new focus on common value auctions and the "winner's curse." In such auctions the value of each item is about the same to all bidders, but different bidders have different information about the underlying value. Virtually all auctions have a common value element; among the burgeoning modern-day examples are those organized by Internet companies such as eBay. Winners end up cursing when they realize that they won because their estimates were overly optimistic, which led them to bid too much and lose money as a result. The authors first unveil a fresh survey of experimental data on the winner's curse. Melding theory with the econometric analysis of field data, they assess the design of government auctions, such as the spectrum rights (air wave) auctions that continue to be conducted around the world. The remaining chapters gauge the impact on sellers' revenue of the type of auction used and of inside information, show how bidders learn to avoid the winner's curse, and present comparisons of sophisticated bidders with college sophomores, the usual guinea pigs used in laboratory experiments. Appendixes refine theoretical arguments and, in some cases, present entirely new data. This book is an invaluable, impeccably up-to-date resource on how auctions work--and how to make them work.
Author: Martin Bichler
Publisher: Cambridge University Press
ISBN: 1107135346
Category : Business & Economics
Languages : en
Pages : 935
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Book Description
An international team of experts covers the pros and cons of different auction formats and lessons learned in the field.
Author: Serafin Grundl
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Paul Klemperer
Publisher: Princeton University Press
ISBN: 0691186294
Category : Business & Economics
Languages : en
Pages : 263
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Book Description
Governments use them to sell everything from oilfields to pollution permits, and to privatize companies; consumers rely on them to buy baseball tickets and hotel rooms, and economic theorists employ them to explain booms and busts. Auctions make up many of the world's most important markets; and this book describes how auction theory has also become an invaluable tool for understanding economics. Auctions: Theory and Practice provides a non-technical introduction to auction theory, and emphasises its practical application. Although there are many extremely successful auction markets, there have also been some notable fiascos, and Klemperer provides many examples. He discusses the successes and failures of the one-hundred-billion dollar "third-generation" mobile-phone license auctions; he, jointly with Ken Binmore, designed the first of these. Klemperer also demonstrates the surprising power of auction theory to explain seemingly unconnected issues such as the intensity of different forms of industrial competition, the costs of litigation, and even stock trading 'frenzies' and financial crashes. Engagingly written, the book makes the subject exciting not only to economics students but to anyone interested in auctions and their role in economics.
Author: Peerapong Dhangwatnotai
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In this dissertation, we design and analyze auctions that are more practical than those in the traditional auction theory in several settings. The first setting is the search advertising market, in which the multi-keyword sponsored search mechanism is the dominant platform. In this setting, a search engine sells impressions generated from various search terms to advertisers. The main challenge is the sheer diversity of the items for sale -- the number of distinct items that an advertiser wants is so large that he cannot possibly communicate all of them to the search engine. To alleviate this communication problem, the search engine introduces a bidding language called broad match. It allows an advertiser to submit a single bid for multiple items at once. Popular models such as the GSP auction do not capture this aspect of sponsored search. We propose a model, named the broad match mechanism, for the sponsored search platform with broad match keywords. The analysis of the broad match mechanism produces many insights into the performance of the sponsored search platform. First, we identify two properties of the broad match mechanism, namely expressiveness and homogeneity, that characterize the performance of the mechanism. Second, we show that, unlike the GSP auction, the broad match mechanism does not necessarily have a pure equilibrium. Third, we analyze two variants of the broad match mechanism, the pay-per-impression variant and the pay-per-click variant. Under a common model of advertiser valuation, we show that the pay-per-click variant is more economically efficient than the pay-per-impression variant. This result justifies the prevalent use of the pay-per-click scheme in search advertising. In addition, the broad match mechanism can be viewed as an auction of which the bidding language is crucial to its performance. In the second part, we design and analyze approximately revenue-maximizing auctions in single-parameter settings. Bidders have publicly observable attributes and we assume that the valuations of bidders with the same attribute are independent draws from a common distribution. Previous works in revenue-maximizing auctions assume that the auctioneer knows the distributions from which the bidder valuations are drawn \cite{M81}. In this dissertation, we assume that the distributions are a priori unknown to the auctioneer. We show that a simple auction which does not require any knowledge of the distributions can obtain revenue comparable to what could be obtained if the auctioneer had the distributional knowledge in advance. Our most general auction has expected revenue at least a constant fraction of that of the optimal distributional-dependent auction in two settings. The first setting concerns arbitrary downward-closed single-parameter environments and valuation distributions that satisfy a standard hazard rate condition, called monotone hazard rate. In this setting, the expected revenue of our auction is improved to a constant fraction of the expected optimal welfare. In the second setting, we allow a more general class of valuation distributions, called regular distributions, but require a more restrictive environment called the matroid environment. In our results, we assume that no bidder has a unique attribute value, which is obviously necessary with unknown and attribute-dependent valuation distributions. Our auction sets a reserve price for a bidder using the valuation of another bidder who has the same attribute. Conceptually, our analysis shows that even a single sample from a distribution -- another bidder's valuation -- is sufficient information to obtain near-optimal expected revenue, even in quite general settings. In the third part, we design and analyze auctions that approximately maximize residual surplus in single-parameter settings. Residual surplus is defined to be the surplus less the sum of the bidders' payments. The guarantee of our auction is of the same type as the auctions in the second part, i.e., its expected residual surplus is a fraction of that of the optimal distributional-dependent auction. Instead of the no-unique-attribute assumption made in the second setting, in this setting we assume that the distributions of bidder valuations can be ordered, that is, the distribution of the first bidder stochastically dominates that of the second bidder and the distribution of the second bidder stochastically dominates that of the third and so on. In every downward-closed stochastic-dominance environment where the distributions of bidder valuations satisfy the monotone hazard rate condition, our auction produces residual surplus that is a $\Omega(\tfrac{1}{\log n})$ fraction of the optimal residual surplus, without taking any bid (although it makes use of the ordering), where $n$ is the number of bidders.
Author: Milena Wittwer
Publisher:
ISBN:
Category :
Languages : en
Pages : 35
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Book Description
Pay-as-bid auctions extend the rules of the well-known first-price auction to the sale of multiple units of the same good. According to a common understanding of the recent literature, strategic incentives in pay-as-bid auctions differ from those in the first-price auctions when bidders have multi-unit demand. I show that each of N symmetrically informed bidders shades his bid for 1 of N shares of a perfectly divisible good in a pay-as-bid auction as if he competed with (N-1)N bidders for one indivisible good in a first-price auction. This analogy carries over to environments where bidders have pri- vate information if equilibrium demand schedules are additively separable in the type but breaks otherwise. Whether bidding in pay-as-bid auctions is more complex than in first-price auctions thus depends on the type of uncertainty bidders face.
