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The Unique-lowest Sealed-bid Auction

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Author Info

  • Harold Houba

    ()
    (VU University Amsterdam)

  • Dinard van der Laan

    ()
    (VU University Amsterdam)

  • Dirk Veldhuizen

    ()
    (VU University Amsterdam)

Abstract

Unique-lowest sealed-bid auctions are auctions in which participation is endogenous and the winning bid is the lowest bid among all unique bids. Such auctions admit very many Nash equilibria (NEs) in pure and mixed strategies. The two-bidders' auction is similar to the Hawk-Dove game, which motivates to study symmetric NEs: Properties and comparative statics are derived and the symmetric NE with the lowest expected gains is the maximin in symmetric strategies, which allows computation through a mathematical program. Simulations provide numerical evidence that the symmetric NE with the lowest expected gains is the unique limit point of the replicator dynamics.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-049/1.

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Date of creation: 16 May 2008
Date of revision:
Handle: RePEc:dgr:uvatin:20080049

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Web page: http://www.tinbergen.nl

Related research

Keywords: Auctions; Sealed-Bid Auction; Evolutionary Stability; Endogenous Entry; Maximin;

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References

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  1. Becker, Johannes Gerd & Damianov, Damian S., 2006. "On the existence of symmetric mixed strategy equilibria," Economics Letters, Elsevier, vol. 90(1), pages 84-87, January.
  2. Rapoport, Amnon & Otsubo, Hironori & Kim, Bora & Stein, William E., 2007. "Unique bid auctions: Equilibrium solutions and experimental evidence," MPRA Paper 4185, University Library of Munich, Germany, revised 17 Jul 2007.
  3. Roger B. Myerson, 1994. "Population Uncertainty and Poisson Games," Discussion Papers 1102, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Maciej Bukowski & Jacek Miekisz, 2004. "Evolutionary and asymptotic stability in symmetric multi-player games," International Journal of Game Theory, Springer, vol. 33(1), pages 41-54, January.
  5. J├╝rgen Eichberger & Dmitri Vinogradov, 2008. "Least Unmatched Price Auctions: A First Approach," Working Papers 0471, University of Heidelberg, Department of Economics, revised Jul 2008.
  6. Myerson, Roger B., 2000. "Large Poisson Games," Journal of Economic Theory, Elsevier, vol. 94(1), pages 7-45, September.
  7. Robert Ostling & Joseph T Wang & Eileen Chou & Colin F Camerer, 2007. "Field and Lab Convergence in Poisson LUPI games," Levine's Bibliography 122247000000001530, UCLA Department of Economics.
  8. Raviv, Yaron & Virag, Gabor, 2009. "Gambling by auctions," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 369-378, May.
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Cited by:
  1. Di Gaetano, Luigi, 2011. "A model of descending auction with hidden starting price and endogenous price decrease," MPRA Paper 35773, University Library of Munich, Germany.
  2. Marco Scarsini & Eilon Solan & Nicolas Vieille, 2010. "Lowest Unique Bid Auctions," Papers 1007.4264, arXiv.org.

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