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Complexity and bidder behavior in iterative auctions

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  • Katerina Sherstyuk

    ()
    (University of Hawaii at Manoa)

Abstract

We extend the finite automata approach to evaluate complexity of strategies in iterative adjustment processes such as auctions. Intuitively, a strategy's complexity is equal to the number of different contingencies in which qualitatively different behaviors are prescribed. Complexity may explain bidder choice of strategies in multi-unit iterative auctions.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 31 (2011)
Issue (Month): 4 ()
Pages: 2769-2776

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Handle: RePEc:ebl:ecbull:eb-11-00040

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Keywords: ascending auctions; complexity; finite automata; experimental evidence;

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  1. Isaac, R. Mark & Salmon, Timothy C. & Zillante, Arthur, 2007. "A theory of jump bidding in ascending auctions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 62(1), pages 144-164, January.
  2. Anthony M. Kwasnica & Katerina Sherstyuk, 2007. "Collusion and Equilibrium Selection in Auctions," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(516), pages 120-145, 01.
  3. Ehud Kalai & William Stanford, 1986. "Finite Rationality and Interpersonal Complexity in Repeated Games," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 679, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Sandro Brusco & Giuseppe Lopomo, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Oxford University Press, Oxford University Press, vol. 69(2), pages 407-436.
  5. Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 36(4), pages 890-907, Winter.
  6. Grigorieva,Elena & Herings,Jean-Jacques & Müller,Rudolf & Vermeulen,Dries, 2004. "The communication complexity of private value single item auctions," Research Memorandum, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) 052, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  7. Sabourian, Hamid, 2004. "Bargaining and markets: complexity and the competitive outcome," Journal of Economic Theory, Elsevier, Elsevier, vol. 116(2), pages 189-228, June.
  8. Douglas Gale & Hamid Sabourian, 2005. "Complexity and Competition," Econometrica, Econometric Society, Econometric Society, vol. 73(3), pages 739-769, 05.
  9. R. Mark Isaac & Kurt Schnier, 2005. "Silent Auctions in the Field and in the Laboratory," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 43(4), pages 715-733, October.
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