Auction Flashcards
what is an english auction
(ascending) it starts at some low bid, each bidder can raise the bid until exactly one bidder is left
what is a dutch auction
itstarts at a high price, and the auctioneer keeps lowering the price till somebody is willing to buy the good
what is first and second price sealed bid auctions?
sealed bid: highest bidder wins
sealed bid: highest bidder pays second highest bidder their amount
what is the dominant strategy for descending bidding (1st price sealed)
choose the p at which to call out, if
the others haven’t yet called out.
what is the dominant strategy for english auctions (2nd price sealed)
stay until the p reaches
your value (you are indifferent between
winning and not winning).
what is the winners curse?
bidder with highest signal wins the object but may pay too much than necessary. As such bidders adjust bids below value
what is the revenue equivalence theroum
values are distributed vl and vh where vh will win and vl will lose , what results is the seller yields the exact same payoff
what conditions must hold true for the revenue equivalence theorum to be true?
Bidders have symmetrically distributed private valuations for the item being auctioned.risk-neutral
Bidders behave rationally, aiming to maximize their utility (or profit) based on their valuations.
Bidders have a common knowledge of the distribution from which their valuations are drawn.
The auction mechanism is truthful, meaning bidders have no incentive to misrepresent their valuations.
what are correlated estimates?
essentially that bidders can be influenced by valuations of other bidders around them, maybe more pessimistic if others have a low estimates e.g in ascending auctions
seller would rather sealed bids
what is an optimal auction for 2 bidders?
dutch auction
risk neutral seller and risk averse buyers - wat auction type
prefers first price sealed to second price sealed
