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Questions tagged [auctions]

Procedures in which participants submit bids, with resources being allocated among bidders in accordance with some pre-specified rule.

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Buyer's efficiency in auctions

first and foremost, I'm not an economist, probably a scientist though. In my country the most popular way to buy and appartment or a house is by first-price-auctions (the highest bid takes it all). ...
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2answers
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What is virtual valuation?

I’m reading through a textbook in auction design when it describes a term, virtual valuation $$\phi_i(v_i) = v_i - \frac{1 - F(v_i)}{f(v_i)}$$ where $f$ is the pdf of a bidders valuation and $F$ is ...
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Ausubel (2004) auction, any implementation?

I'm looking for an implementation of the ascending-bid auction introduced in his 2004 AER paper. More specifically, a market using this framework which either has been reviewed by other scholars or ...
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1answer
196 views

All-Pay Auction Mixed Strategy Equilibrium

I am currently struggling with this exercise. Professor Nash announces that he will auction off a 20 dollars bill in a competition between two students chosen at random. Each student is to privately ...
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3answers
190 views

Why are second price auctions preferred if they don't maximize expected revenue?

The reasoning usually given for why you would use a second price auction (SPA) as opposed to a first price auction (FPA) is that FPA encourage underbidding while SPA encourage truthful bidding. That ...
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21 views

Optimal auction type or mechanism design for property sale

What is the optimal auction type or mechanism design for the sale of a single plot of land with the following attributes: in a city suitable for building may be developed undivided, or may be ...
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1answer
51 views

First Price Auction with Reserve Price

I'm trying to solve the following question: "The seller wants to auction off a single item to two bidders, the valuation of each bidder is an iid draw from a uniform distribution on $[0,1]$ where ...
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0answers
70 views

Auction mechanism with no trusted third-party

I have been using a double-auction mechanism to solve a two-sided market where multiple agents are competing to supply/use slices of a shared resource. The owner of the resource is a trustable third-...
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34 views

Charging a minimum increment on the second price in online advertising auctions

Many ad servers running GSP auctions tend to charge a $0.01 increment on the second price. I was wondering if there was any theoretical basis for this, or is it just a way for ad servers to make a ...
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Is CDAP always better than DDAP for efficieny purposes?

When is it ever better to use a discrete double auction procedure or call auction over a continuous double auction procedure in terms of achieving efficiency for AD-Securities? Does DDA get quicker ...
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2answers
86 views

Virtual valuation when the distribution is discrete

The virtual valuation of a buyer in an auctin is a function used to calculate the expeced revenue of a seller from that buyer. When the buyer's value comes from a continuous distribution with pdf $f$ ...
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1answer
222 views

How are ties broken in a second price sealed bid auction?

Say there are two people who evaluate an object at 5 dollars and a third who evaluates it at 4 dollars playing a second price sealed bid auction. The first two bid 5 dollars and the third bids 4 ...
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1answer
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Ex-post vs Ex-ante Budget Balance in Auctions

Have I understood this correctly? When I say my auction mechanism is ex-post budget balanced it means that in practice (I have done market simulations) and according to the results my mechanism is ...
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2answers
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Second Price Auction - adjusting PDF for reservation price

The situation: There is a second price auction with 2 players. Consider a second-price auction with 2 players. Their valuations of the object at auction are and are independently and identically ...
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1answer
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Auction question

I’m studying on auction. But I couldn’t understand some questions about this topic. And I cannot solve such type questions. For example, I know that a set of symmetric and risk neutral bidders ...
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2answers
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In auction theory, why is my own valuation a random variable?

Auction theory typically (always?) begins by assuming that each bidder's valuation is a random variable. Now, it might seem reasonable (at least from a Bayesian perspective) for you to treat other ...
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1answer
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Bayesian-Nash equilibrium in a first-price auction

In a famous textbook example of a Bayesian-Nash equilibrium, there is a first-price auction with two independent players. Each player $i$ values the item as $v_i$, which is distributed uniformly in $[...
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1answer
61 views

Auction with “buy-it-now” option

Consider the buy-it-now price often included in online auctions. Suppose that 2 bidders in an ascending oral (English) auction bid for an object. Each has values i.i.d uniformly on $[0,1]$. Suppose ...
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1answer
414 views

Bayes-Nash equilibrium in Auction

Consider a seller offering a single object for sale to two buyers with independent valuations – each bidder’s value is uniformly distributed on [0,1]. Assume that buyer 1 submits a bid that buyer ...
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0answers
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Marginal Revenue Interpretation of Auctions

I'm reading Klemperer's survey on auction theory (pages 17-18) which discusses the relation between traditional microeconomic price theory and the revenue equivalence result. Firstly, I don't quite ...
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1answer
46 views

Deriving support in bidding strategy

I'm considering some question, and I'm not sure what it asks me to do: Consider a two-bidder auction with two types of players, high type and low type ($v_h>v_l$). The probability of a low ...
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1answer
56 views

How to prove that a point is a maximum point

I have the following function: $$ \Pi =\int_{0}^{z}[x_{1} + \alpha y + \alpha \frac{N-2}{2}y - \beta(z) - \gamma ( \beta(z) - \beta(y))](N-1)y^{N-2} dy $$ The first derivative with respect to $z$ is:...
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Not sure how to use this formula for auctions

In my textbook I was given this formula for auctions: As far as I understand, $N$ is number of people who place bets, $P_{personal}$ means my subjective value of the current lot (it's also assumed ...
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Maximizing utility function (auction theory)

There are two bidders (two individuals). Bidder 1 wants to maximize the following function (his utility function): $$ u_{1}(V,b_{1} | b^{w}) = \begin{cases} x_{1} + x_{2} - b_{1} & \quad ...
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1answer
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In US gov treasury auction, can the highest bidder force high prices for all others

In US treasury auction (for bonds and notes), my understanding is that the highest bidder's price (and rate) is applied for all the buyers. Assume a buyer 'A' who plans to buy a smaller number of ...
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1answer
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Bayesian Mechanism vs Prior-free Mechanism

I have a double auction mechanism in which the valuations of the agents for the items are drawn from a known random distribution. To be precise, the valuations are the probability of each agent ...
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1answer
54 views

Incentive compatibility: Weakly dominant strategy versus Nash equilibrium?

When it comes to proving that a mechanism e.g. auction is incentive compatible this is the approach I'm using: I break down all the cases that might happen if the agent reports an untruthful value to ...
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1answer
114 views

What types of 'market mechanisms' are said to exist besides auctions?

The book Understanding Auctions states: The term auction covers a wide range of market mechanisms that are used to exchange products and services by determining who receives an item and how much is ...
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Iterative versus continuous auctions

I'm a little confused about the terminology used in economics literature while describing iterative and continuous auctions. Have I understood the difference correctly? Iterative Auction: The ...
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0answers
247 views

Is a Walrasian equilibrium necessarily Pareto efficient?

Is it correct to say that in a double auction the Walrasian equilibrium Pareto efficient?
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50 views

What is the Nash equilibrium of the game in the description?

Rules of the game: A dollar M (example dollar 30) bill is to be auctioned, M$ \ge 0$ The minimum allowed bid is dollar k, $1 \le k \le $M No two (or more) players are allowed to bid the same amount ...
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1answer
142 views

Nash Equilibrium in 2 bidder auction

I am trying to find Nash Equilibrium of an auction with two bidders in which the highest bidder wins the object but both bidders pay the losing bid. Here every bidder follows the same bidding strategy ...
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0answers
14 views

If I am a newbie, what sources should I read first to learn to calculate return of investment and evaluate risk of investment?

I want to understand return of investment and make a risk analysis. Then decide to enter an auction. What sources should I read first?
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How to decide the best bid in an auction?

I am going to participate in a decision committee of a governmental auction in energy market. I want to learn more about how to decide which bid is the best in short/mid/long term. Can you suggest ...
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1answer
71 views

Auction models for tickets

Consider a typical event for which tickets are sold. The event only occurs once, and for simplicity we can assume that only one kind of ticket is provided, i.e, no VIP seats etc. $N$ tickets are ...
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1answer
334 views

Reverse Auction bidding strategy

A buyer wants to buy contiguous land plots from three landowners (sellers) who own fixed size plots. Sellers have their private valuation of their plots. The buyer will hold a closed bid procurement ...
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1answer
196 views

2 Player All-Pay Auction

Consider a 2 player all-pay auction, bidding for $1. Each submits a bid that is a real number, thus $S_i=[0,\infty)$. The player with a higher bid wins $1, but both players must pay the submitted bid....
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1answer
62 views

What does speculative bid mean?

I tried to look for this term on the Internet, to no avail, as what I found does not fit into the context I found this word in. My context is: The incentive-compatible instrument of Vickrey Auction ...
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1answer
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What does it mean when we say an iso curve has no interior?

From the paper: "Standard Auctions with Financially Constrained Bidders" - by Che and Gale. The authors describe an isobid curve as the curve that represents payments of the same value in a 2-...
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194 views

Call Market vs Auction Market vs Double Auction Market

I'm coming from a CS background and want to analyze different types of markets. Are Call, Auction and Double Auction markets mutually exclusive? As far as I could research Call market looks like ...
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1answer
137 views

Auction and best response

Consider an auction in which $k$ identical objects are sold to $ n>k $ bidders. Each bidder $i$ needs only one object and has a valuation $v_{i}$ for the object. In the auction, simultaneously, ...
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2answers
434 views

One bidder in 2nd price auction

in second priced auctions, the highest bidder wins the auction and pays the price of the second highest bidder. What happens if there's only one bidder? That bidder would have won the auction, but ...
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1answer
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Difference between double auction and continuous double auction?

What is the difference between double auction and continuous double auction? Sometimes I feel that they were types of two-sided auction but sometimes I feel as if they were two separate concepts.
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1answer
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Does the VCG algorithm work for any bundle valuation function?

Assume we have $n$ buyers of $|M|=m$ items in a combinatorial auction. So as we know, we can use the Vickrey-Clarke-Groves (VCG) algorithm to allocate bundles of items to buyers as best as possible. ...
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Derivation of Equilibrium Strategy in 1st-price Auction?

Hey, everyone. I desperately need help understanding some math in auction theory. I have been writing a paper as an undergrad for auction theory, and after all of my research I just cannot understand ...
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2answers
159 views

Primary dealers in treasury auctions

When the treasury or equivalent institution of a country auctions of government bonds there is frequently (i.e. in most countries) some sort of restriction on who can participate. The term primary ...
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1answer
111 views

Vickrey Auction question

I'm looking at this webpage here: https://gilkalai.wordpress.com/2013/05/18/test-your-intuition-21-auctions/ I've generated the R code below to simulate the value for each Bidder 1000's times. I'm ...
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Empirical Study of Auctions with Limited Data

I have limited real auction data which I am trying to see if I can do any empirical analysis. The data consists of auction type (i.e., forward or reverse), protocol (e.g., Vickrey, Dutch, English, etc....
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1answer
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What are the advantages and disadvantages of second price auctions?

I am reading https://en.wikipedia.org/wiki/Vickrey_auction about second price auctions. It seems counterintuitive to me that the winning bidder pays the bidding price of the runner-up bidder, rather ...
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1answer
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The Price is Right Bidding Strategies

I am currently reading this article. If you are unfamiliar with the game, "The Price is Right", at the beginning, four bidders are selected who have to guess the price of some consumer object. ...