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Complexity and bidder behavior in iterative auctions

Author

Listed:
  • 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.

Suggested Citation

  • Katerina Sherstyuk, 2011. "Complexity and bidder behavior in iterative auctions," Economics Bulletin, AccessEcon, vol. 31(4), pages 2769-2776.
  • Handle: RePEc:ebl:ecbull:eb-11-00040
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I4-P249.pdf
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    References listed on IDEAS

    as
    1. Isaac, R. Mark & Salmon, Timothy C. & Zillante, Arthur, 2007. "A theory of jump bidding in ascending auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 144-164, January.
    2. Douglas Gale & Hamid Sabourian, 2005. "Complexity and Competition," Econometrica, Econometric Society, vol. 73(3), pages 739-769, May.
    3. 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, vol. 69(2), pages 407-436.
    4. Dan Ariely & Axel Ockenfels & Alvin E. Roth, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," RAND Journal of Economics, The RAND Corporation, vol. 36(4), pages 890-907, Winter.
    5. R. Mark Isaac & Kurt Schnier, 2005. "Silent Auctions in the Field and in the Laboratory," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 715-733, October.
    6. Sabourian, Hamid, 2004. "Bargaining and markets: complexity and the competitive outcome," Journal of Economic Theory, Elsevier, vol. 116(2), pages 189-228, June.
    7. Kalai, Ehud & Stanford, William, 1988. "Finite Rationality and Interpersonal Complexity in Repeated Games," Econometrica, Econometric Society, vol. 56(2), pages 397-410, March.
    8. Grigorieva,Elena & Herings,Jean-Jacques & Müller,Rudolf & Vermeulen,Dries, 2004. "The communication complexity of private value single item auctions," Research Memorandum 052, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    9. Anthony M. Kwasnica & Katerina Sherstyuk, 2007. "Collusion and Equilibrium Selection in Auctions," Economic Journal, Royal Economic Society, vol. 117(516), pages 120-145, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    ascending auctions; complexity; finite automata; experimental evidence;

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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