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Unique Bid Auction Games

Author

Listed:
  • Amnon Rapoport

    () (Department of Management and Marketing, A. Gary Anderson Graduate School of Management, University of California)

  • Hironori Otsubo

    () (Strategic Interaction Group, Max Planck Institute of Economics, Jena, Germany)

  • Bora Kim

    () (Department of Management and Organizations, Eller College of Management, University of Arizona)

  • William E. Stein

    () (Department of Information and Operations Management, Mays Business School, Texas A&M University)

Abstract

Two auction mechanisms are studied in which players compete with one another for an exogenously determined prize by independently submitting integer bids in some discrete and commonly known strategy space specified by the auctioneer. In the unique lowest (highest) bid auction game, the winner of the prize is the player who submits the lowest (highest) bid provided that this bid is unique, i.e., unmatched by other bids. Assuming a commonly known finite population of players, a non-negative cost of entry, and an option to stay out of the auction if the entry cost is deemed too high, we propose an algorithm for computing symmetric mixed-strategy equilibrium solutions to the two variants of the auction game, illustrate them, and examine their properties.

Suggested Citation

  • Amnon Rapoport & Hironori Otsubo & Bora Kim & William E. Stein, 2009. "Unique Bid Auction Games," Jena Economic Research Papers 2009-005, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2009-005
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    File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00141919
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    Cited by:

    1. Gallice Andrea, 2016. "Price Reveal Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(2), pages 485-514, June.
    2. Takashi Yamada & Nobuyuki Hanaki, 2016. "An Experiment on Lowest Unique Integer Games," Post-Print halshs-01204814, HAL.
    3. Andrea Gallice, 2010. "Price Reveal Auctions on the Internet," Carlo Alberto Notebooks 147, Collegio Carlo Alberto.
    4. Marco Scarsini & Eilon Solan & Nicolas Vieille, 2010. "Lowest Unique Bid Auctions," Papers 1007.4264, arXiv.org.
    5. Robert Östling & Joseph Tao-yi Wang & Eileen Y. Chou & Colin F. Camerer, 2011. "Testing Game Theory in the Field: Swedish LUPI Lottery Games," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 1-33, August.

    More about this item

    Keywords

    Unique bid auction games; Equilibrium analysis;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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