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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12 views

Uniform price vs discriminatory price double auction

Uniform price and discriminatory price double auctions are the most commonly used auction mechanisms in the trading markets especially in peer to peer energy trading markets. However, I could find ...
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How to calculate clearing when supply demand curve do not intersect

I am working on a P2P energy trading project and want to implement a uniform price double auction. I have confusion about how the clearing price will be determined if the supply-demand curves do not ...
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27 views

First-price symmetric auction with discrete value

I've been trying to work the following problem out but I can't quite seem to understand it, or the whole concept of first-place auctions. I don't understand how we get to the equilibrium. The problem ...
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What is equilibrium dependent upon in Generalized Second-Price Auctions?

Theory states that GSP auctions induce truthful bidding. Is it the case that this is true ONLY IF a) each of the bidders truthfully bids their value ($b_i = v_i$) (each bidder's optimal strategy) ...
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What is the privilege of a primary dealer?

Primary dealers have a privileged position, so there is value in being registered as a primary dealer. - https://economics.stackexchange.com/a/13450/8387 I was previously under the assumption that ...
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Regarding exchanges (crypto exchanges or equity exchanges) is there a reason Vickery auctions (second price sealed bid auctions) are not used?

Is there any benefit to the current choice of auctions in exchanges or conversely any reason why no one has used Vickery auctions in equity exchanges. I know they're used in ad auctions.
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Unique Nash-equilibria in multi-unit auctions with uncertain participation

Setup Consider a one shot sealed bid multi-unit auction where $N$ bidders compete for $K$ identical objects and each bidder $i$ has demand $d_i\in \{1,\dots,K\}$. Bidders receive private i.i.d. ...
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Hubzu.com bidding terminology - “value-based foreclosure auction” [closed]

The hubzu website often has properties for bidding that state "this is a value-based foreclosure auction, which means the beneficiary has provided a bid based on market value". However, it then ...
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31 views

Clearing price in a double auction market

I have been reading a paper on energy markets and I have stumbled upon double markets and clearing prices, which got me quite confused (bare in mind, I am relatively new to this topic). Quote from the ...
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50 views

Monotonicity of second price auctions with bidder-specific reserve prices

I am having difficulty understanding the problem below: Given CDFs $F_1, ..., F_n$, prove that the allocation rule of a second-price auction with bidder-specific reserve prices is monotone. The item ...
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Is second price auction better than first price sealed bid auction? Why? [duplicate]

As I understand and have read the advantage of the 2nd price auction is that it encourages bidder to bid for 'true value', which I think can also be done with the 1st price sealed bid auction. I might ...
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54 views

Expected payment in a second price auction with affiliation

The symmetric bidding strategy in a second-price auction with affiliation is given by $\beta(x)=v(x,x)$, where $v(x,y)=E[V_1|X_1=x,Y_1=y]$ (here $Y_1$ is the highest ordered statistic among the ...
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53 views

Are there multiple equilibria in the second price auction?

Suppose that $n\geq 2$ bidders compete in a second price auction. Each bidder $i$ knows their own valuation $v_i$, but only knows the distribution generating the valuations of the other players. ...
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149 views

Auctions with affiliation

This problem is an example given in Vijay Krishna's Auction Theory (2nd Edition, Chapter-6, Example 6.2). The problem is as follows: Suppose $S_1,S_2$, and $T $ are uniformly and independently ...
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Is there a way to eliminate shilling, spiting, and overbidding in second price auctions?

In a 2nd price option, if all the player choice their bids independently, the optimal strategy is to bid their valuation. However, in some situations, their decisions can effect each other. For ...
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76 views

Best-responding to a stochastically higher distribution of bids

In Auction Theory, Krishna writes that: a bidder who faces a stochastically higher distribution of bids–in the sense of reverse hazard rate dominance–will bid higher (This follows the proof of ...
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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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374 views

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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616 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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568 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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523 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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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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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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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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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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268 views

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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191 views

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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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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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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392 views

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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125 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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467 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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209 views

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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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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59 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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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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148 views

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
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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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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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229 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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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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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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524 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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275 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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146 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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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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190 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, ...