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Equilibrium Linear Bidding Strategies

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  • Michael H. Rothkopf

    (Xerox Palo Alto Research Center, Palo Alto, California)

Abstract

Symmetric bidding models are considered in which all bidders start with the same prior distribution on the value of the subject of the auction. In addition, each bidder is assumed to develop his own independent estimate. Each bidder's strategy must be a preselected linear function of his estimate. Closed form expressions are obtained for equilibrium sets of such strategies and the resulting expected profit to each bidder when the estimates are drawn from a Weibull distribution. These equilibrium linear strategies approach equilibrium multiplicative strategies as the estimating accuracy improves relative to the common prior information.

Suggested Citation

  • Michael H. Rothkopf, 1980. "Equilibrium Linear Bidding Strategies," Operations Research, INFORMS, vol. 28(3-part-i), pages 576-583, June.
    • Handle: RePEc:inm:oropre:v:28:y:1980:i:3-part-i:p:576-583
    DOI: 10.1287/opre.28.3.576
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    Cited by:

    1. Susobhan Ghosh & Sujit Gujar & Praveen Paruchuri & Easwar Subramanian & Sanjay P. Bhat, 2019. "Bidding in Smart Grid PDAs: Theory, Analysis and Strategy (Extended Version)," Papers 1911.08260, arXiv.org, revised Nov 2019.
    2. Paulo Fagandini & Ingemar Dierickx, 2023. "Computing Profit-Maximizing Bid Shading Factors in First-Price Sealed-Bid Auctions," Computational Economics, Springer;Society for Computational Economics, vol. 61(3), pages 1009-1035, March.
    3. Dutta, Goutam & Natesan, Sumeetha R., 2016. "Optimization of Customized Pricing with Multiple Overlapping Competing Bids," IIMA Working Papers WP2016-11-02, Indian Institute of Management Ahmedabad, Research and Publication Department.

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