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Optimal Bidding Strategies in Non-Sealed Bid Online Auctions of Common Products with Quantity Uncertainty

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Author Info

  • Chonawee Supatgiat

    (Tractebel North America)

  • John R. Birge

    (Northwestern University)

  • Rachel Q. Zhang

    (Cornell University)

Abstract

We consider non-sealed bid online auctions of common products with quantity uncertainty. Both first-price (also known as pay-as-you-bid) and uniform-price auctions are considered. In these auctions, all bidders have the same valuation of the products but may have different demand quantities. The number of units being auctioned can be random with a known and common distribution. Each bidder decides on a bidding price to maximize her profit. We derive Nash equilibrium solutions, i.e., bidders' optimal bidding strategies, and the resulting market clearing prices.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 0211005.

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Length: 32 pages
Date of creation: 10 Nov 2002
Date of revision: 05 Mar 2003
Handle: RePEc:wpa:wuwpga:0211005

Note: Type of Document - pdf; pages: 32 . working paper, please give us your comments.
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Web page: http://128.118.178.162

Related research

Keywords: multi-unit auctions; pure common value auction; discrete bid level; bid increment; E-commerce;

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  1. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May.
  2. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
  3. Talman, A.J.J. & Laan, G. van der & Van der Heyden, L., 1987. "Variable dimension algorithms for solving the nonlinear complementarity problem on a product of unit simplices using general labelling," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153106, Tilburg University.
  4. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
  5. Rothkopf, Michael H. & Harstad, Ronald M., 1994. "On the role of discrete bid levels in oral auctions," European Journal of Operational Research, Elsevier, vol. 74(3), pages 572-581, May.
  6. Supatgiat, Chonawee & Zhang, Rachel Q & Birge, John R, 2001. "Equilibrium Values in a Competitive Power Exchange Market," Computational Economics, Society for Computational Economics, vol. 17(1), pages 93-121, February.
  7. repec:wop:humbsf:2000-72 is not listed on IDEAS
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