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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)

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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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Publisher 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

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

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Find related papers by JEL classification:
C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May. [Downloadable!] (restricted)
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  2. Supatgiat, Chonawee & Zhang, Rachel Q & Birge, John R, 2001. "Equilibrium Values in a Competitive Power Exchange Market," Computational Economics, Springer, vol. 17(1), pages 93-121, February. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  5. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
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