Term 2 week 8 Flashcards
What is the difference between english auction and dutch auction?
-English auction, start low and keep bidding higher
-Dutch auction start high and keep lowering
What is a sealed-bid auction?
first price auction, bidder has to pay her bid
second price auction, bidder has to pay 2nd highest bid(makes you want to pay a higher bid)
What is the set up for a bid?
What happens if the bid is the same in an auction?
what is the payoff in the auction?
Both players are equally likely to get the object
-Difference between what you are willing to pay and what you pay
If there are two types a high valuation and low valuation if player 1 is a high type what is the chance they will win the bid
What about if the player is a vL
1/2 (1) + 1/2(1/2)Wh
What are the bidders expected payments and surplus in second price auctions
What is truthful bidding in second price auctions?
Truthful bidding is weakly dominant
Can truthful bidding be a bayes-nash equilibrium in first price auctions
Why is this?
What is the unique bayes nash equilibrium?
For high valuation types no
For low valuation types yes
-if type VH puts in a truthful bid surplus is zero
-if you reduce bid below VH you could gain on an opponent with VL
-This means in equilbiriium bh< vh
for low type paying valuation is bayes nash equilbirium as if you do bl you will keep raising it until vl
What is the highest other bid in
second auction?
b overline not i
How do you draw the ex-post payoff
if bi> b overline i payoff = vi - bvoverline i
if bi = b overline payoff = 1/ hashtag + 1 (vi- overline b) which is the randomisation technology.
What happens to bidding truthfully in second price auction?
bidding truthfully is weakly dominant in 2nd price auction
Why must we consider mixed strategy for
What is the expected payoff for mixed strategy
How can you solve for the highest bid in the support
What is the strategy for a first price auction?
mix with a higher probability for higher bids.
