scholarly journals Strategies for Making Best Offers on eBay

2017 ◽  
Vol 14 (3) ◽  
Author(s):  
William Britt ◽  
William Gryc ◽  
Jamie Oliva ◽  
Brittney Tuff ◽  
Charli White
Keyword(s):  
Optimal Strategies ◽  
Bidding Strategy ◽  
Model Risk ◽  
Know How ◽  
Bayesian Nash Equilibrium ◽  
Sealed Bid ◽  
Risk Neutral ◽  
Price Auction ◽  
Equilibrium Bidding ◽  
Best Offer

We model for “Buy-It-Now or Best Offer” auctions on eBay using two different models. In the first model, risk-neutral bidders submit bids in serial and try to surpass a stochastic seller threshold while taking into account how many previous failed bids were made by other bidders. We compute optimal strategies for this model and show that bidder expected surplus decreases in the number of previous failed bids. In the second model we assume bidders do not know how many previous failed bids have been made, and instead use a first-price sealed-bid mechanism with a buy-out price where bidders serially submit bids with the knowledge that no previous bidders have used the buy-out price. We derive a unique equilibrium bidding strategy for risk-neutral bidders in this serial model, show that any equilibrium in a similar parallel bidding model is the same as the equilibrium in the serial model, and compute seller revenue. In particular, under certain circumstances, bidders will bid more in this format than they would in a standard first-price sealed-bid auction, but that a seller maximizes expected revenue by setting a buy-out price higher than any bidder is willing to pay thereby making the auction essentially a first-price auction. KEYWORDS: Auction Theory; eBay; Buy-It-Now or Best Offer; Symmetric Bayesian Nash Equilibrium; Buy-Out Price; First-Price Sealed-Bid

Sequential First-Price Auction with Randomly Arriving Buyers

2018 ◽  
Vol 6 (1) ◽  
pp. 29-34
Author(s):  
Shulin Liu ◽  
Xiaohu Han
Keyword(s):  
Dynamic Model ◽  
Equivalence Theorem ◽  
Bidding Strategy ◽  
Revenue Equivalence ◽  
Dynamic Markets ◽  
Differentiated Goods ◽  
Price Auction ◽  
Second Price Auction ◽  
Equilibrium Bidding ◽  
Model Setting

AbstractIn this paper we reanalyze Said’s (2011) work by retaining all his assumptions except that we use the first-price auction to sell differentiated goods to buyers in dynamic markets instead of the second-price auction. We conclude that except for the expression of the equilibrium bidding strategy, all the results for the first-price auction are exactly the same as the corresponding ones for the second-price auction established by Said (2011). This implies that the well-known “revenue equivalence theorem” holds true for Said’s (2011) dynamic model setting.

A NOTE ON DISCRETE BID FIRST-PRICE AUCTION WITH GENERAL VALUE DISTRIBUTION

2010 ◽  
Vol 12 (01) ◽  
pp. 75-81 ◽  
Author(s):  
GANGSHU (GEORGE) CAI ◽  
PETER R. WURMAN ◽  
XITING GONG
Keyword(s):  
Nash Equilibrium ◽  
Value Distribution ◽  
Bayesian Nash Equilibrium ◽  
Sealed Bid ◽  
Price Auction

This paper evaluates the discrete bid first-price sealed-bid (FPSB) auction in a model with a general value distribution. We show that a symmetric Bayesian Nash equilibrium exists for the discrete bid FPSB auction. We further prove that the discrete bid FPSB equilibrium conditionally converges to that of a continuous bid FPSB auction.

Optimal Bidding Decision of Bidders in Homogeneous Goods Procurement

2013 ◽  
Vol 415 ◽  
pp. 726-729
Author(s):  
Zhong Wen Chen
Keyword(s):  
Optimal Decision ◽  
Bidding Strategy ◽  
Uniform Price Auction ◽  
Uniform Price ◽  
Nonlinear Equilibrium ◽  
Price Auction ◽  
Optimal Bidding ◽  
Equilibrium Bidding ◽  
Divisible Goods ◽  
Optimal Decision Making

In this paper, a uniform price auction mechanism for procuring homogeneous divisible goods is studied, and both nonlinear bidding strategy and linear bidding strategy of symmetric bidders are analyzed. And then the dominant relationship is discussed deeply between the two kinds of equilibrium bids. The results show that the nonlinear equilibrium bidding strategy dominates linear ones. Based on this analysis, several suggestions are given on how to make optimal decision making on bidding strategy choice for bidders.

The stochastic Mitra–Wan forestry model: risk neutral and risk averse cases

2014 ◽  
Vol 115 (2) ◽  
pp. 175-194 ◽  
Author(s):  
Adriana Piazza ◽  
Bernardo K. Pagnoncelli
Keyword(s):  
Risk Averse ◽  
Model Risk ◽  
Risk Neutral

scholarly journals On the ratifiability of efficient cartel mechanisms in first-price auctions with participation costs and information leakage

2019 ◽  
Author(s):  
Xiaoyong Cao ◽  
Shao-Chieh Hsueh ◽  
Guoqiang Tian
Keyword(s):  
Information Leakage ◽  
Sealed Bid ◽  
Price Auction ◽  
Participation Costs

Abstract This paper addresses the ratifiability of an efficient cartel mechanism in a first-price auction. When a seller uses a first-price sealed-bid auction, the efficient all-inclusive cartel mechanism will no longer be ratifiable in the presence of both participation costs and potential information leakage. A bidder whose value is higher than a cut-off in the cartel will have an incentive to leave the cartel, thereby sending a credible signal of his high value, which discourages other bidders from participating in the seller’s auction. However, the cartel mechanism is still ratifiable where either the participation cost or information leakage is absent.

scholarly journals Learning to Set the Reserve Price Optimally in Laboratory First Price Auctions

Games ◽  
2018 ◽  
Vol 9 (4) ◽  
pp. 79
Author(s):  
Priyodorshi Banerjee ◽  
Shashwat Khare ◽  
P. Srikant
Keyword(s):  
Choice Behavior ◽  
Reserve Price ◽  
Price Auction ◽  
Equilibrium Bidding ◽  
Fixed Period

We analyze choices of sellers, each setting a reserve price in a laboratory first price auction with automated equilibrium bidding. Subjects are allowed to gain experience for a fixed period of time prior to making a single payoff-relevant choice. Behavior of more experienced sellers was consistent with benchmark theory: average reserve price for these sellers was independent of the number of bidders and equaled the predicted level. Less experienced sellers however deviated from the theoretical benchmark: on average, they tended to shade reserve price below the predicted level and positively relate it to the number of bidders.

WELFARE LOSS IN LINEAR PRICE-PREFERENCE PROCUREMENT AUCTIONS

2007 ◽  
Vol 09 (04) ◽  
pp. 719-730
Author(s):  
WINSTON T. H. KOH
Keyword(s):  
Uniform Distribution ◽  
Upper Bound ◽  
Government Procurement ◽  
Welfare Loss ◽  
Procurement Auctions ◽  
Domestic Firms ◽  
Sealed Bid ◽  
Non Linear ◽  
Price Auction

In government procurement auctions, discrimination in favor of one group of participants (e.g. domestic firms, minority bidders) over another group is a common practice. The optimal discriminatory rules for these auctions are typically non-linear and could be administratively complex and costly to implement. In practice, procurement auctions are usually organized as sealed-bid first-price auction with a simple percentage price-preference policy. In this paper, we analyze a model with two bidders that draw their costs from a common uniform distribution, and derive an upper bound to the welfare loss resulting from the use of linear-price preference auctions.

An Analysis of Protectionist First-Price Auctions

1993 ◽  
Vol 37 (1) ◽  
pp. 21-30
Author(s):  
Winston T. H. Koh
Keyword(s):  
Foreign Firm ◽  
Consumer Surplus ◽  
Government Procurement ◽  
Knowing That ◽  
Sealed Bid ◽  
Government Project ◽  
Price Auction ◽  
Second Price Auction ◽  
The Government ◽  
Sealed Bid Auctions

The paper considers the following problem: One local firm and one foreign firm, each risk-neutral, bid to supply a government project, each knowing its cost, and knowing that the rival's cost is independently uniform on [0,1]. The government wishes to maximise the local surplus, defined as the sum of consumer surplus and the local firm's profit. The paper analyses the equilibrium bid strategies for the protectionist first-price auction, and shows that the protectionist first-price auction generates a larger local surplus compared with the protectionist second-price auction when rule-of-thumb discrimination is practised. The result provides another reason for the prevalence of sealed-bid auctions in government procurement.

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