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.

Why the Reserve Price Should Not Be Kept Secret

2006 ◽  
Vol 6 (1) ◽  
Author(s):  
Karine Brisset ◽  
Florence Naegelen
Keyword(s):  
Price Policy ◽  
Risk Averse ◽  
Relative Risk Aversion ◽  
Reserve Price ◽  
Bayesian Equilibrium ◽  
Ascending Auctions ◽  
Price Auction ◽  
Second Price Auction ◽  
Optimal Reserve ◽  
Secret Reserve Price

This paper considers the optimality of setting a secret reserve price in ascending auctions. Contrary to intuition, an ascending auction is no longer equivalent to a second price auction when the reserve price is secret. We determine the seller's optimal reserve price policy when the bidders' values are private and independently distributed and when the bidders are risk averse. We show that an optimal secret reserve price policy can dominate an optimal public reserve price policy when the bidders' degree of constant relative risk aversion is sufficiently high and when the seller can commit to a reserve price policy before learning her type. In contrast, a secret reserve price policy can never be part of a Bayesian equilibrium when the seller is informed.

scholarly journals Reserve price of risk-averse search engine in keyword auctions with advertisers’endogenous investment

2019 ◽  
Author(s):  
Qin Yang ◽  
Xianpei Hong ◽  
Zongjun Wang ◽  
Huaige Zhang
Keyword(s):  
Risk Aversion ◽  
Social Welfare ◽  
Search Engine ◽  
Optimal Investment ◽  
Total Efficiency ◽  
Risk Averse ◽  
Reserve Price ◽  
Bidding Strategies ◽  
Keyword Auctions ◽  
Equilibrium Bidding

Motivated by vigorous development of keyword auctions, this paper analyzes the reserve price policies in keyword auction with advertisers’ endogenous investment and risk-averse search engine. We explore advertisers’ optimal investment and equilibrium bidding strategies , and derive the determination functions where utility-maximizing reserve price and efficient reserve price which maximizes the social welfare satisfy respectively. The results show that advertisers’ equilibrium bidding is monotonously increasing in bidders’ valuations, the number of advertisers, as well as the reserve price. Meanwhile, advertisers’ optimal investment is negatively correlated with reserve price and the number of advertisers. By numerical examples, the utility-maximizing reserve price decreases with the risk aversion parameter and the number of advertisers. Search engine’s expected utility increases with risk aversion parameter and decreases with the number of advertisers. Moreover, we declare that search engine can use reserve price as a regulatory tool to increase the utility. But there is an upper bound on search engine’s utility. It is interesting to find the efficient reserve price equals to zero. Hence there is a trade-off between total efficiency and search engine’s utility by search engine that has incentive to withhold reserve price that would benefit social welfare.

scholarly journals Market Selection and the Information Content of Prices

Econometrica ◽  
2021 ◽  
Vol 89 (5) ◽  
pp. 2049-2079
Author(s):  
Alp E. Atakan ◽  
Mehmet Ekmekci
Keyword(s):  
Information Content ◽  
Private Information ◽  
Information Aggregation ◽  
Reserve Price ◽  
Market Selection ◽  
Uniform Price Auction ◽  
Uniform Price ◽  
Common Value ◽  
Common Value Auctions ◽  
Price Auction

We study information aggregation when n bidders choose, based on their private information, between two concurrent common‐value auctions. There are k s identical objects on sale through a uniform‐price auction in market s and there are an additional k r objects on auction in market r, which is identical to market s except for a positive reserve price. The reserve price in market r implies that information is not aggregated in this market. Moreover, if the object‐to‐bidder ratio in market s exceeds a certain cutoff, then information is not aggregated in market s either. Conversely, if the object‐to‐bidder ratio is less than this cutoff, then information is aggregated in market s as the market grows arbitrarily large. Our results demonstrate how frictions in one market can disrupt information aggregation in a linked, frictionless market because of the pattern of market selection by imperfectly informed bidders.

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

scholarly journals Multi-bidder First Price Auction with Beliefs

2019 ◽  
Vol 7 (1) ◽  
pp. 140-160
Author(s):  
Hyeon Park
Keyword(s):  
Closed Form ◽  
Arbitrary Number ◽  
Value Of Information ◽  
Jel Classification ◽  
The Other ◽  
Type Space ◽  
Closed Form Solutions ◽  
Price Auction ◽  
Equilibrium Bidding

This paper characterizes the set of equilibria in the first price auction with multiple bidders—specifically three bidders, each of whose type space is multi-dimensional, incorporating a bidder’s beliefs about others’ valuations. In this auction, each bidder independently and privately learns the other two opponents’ valuations with some probability. This paper derives closed form solutions for equilibrium bidding behaviours parameterized by the degree of information when the bidder has homogeneous beliefs regarding each opponent. This paper demonstrates how much the level of information affects the bidding behaviours of the informed bidders. In addition, this paper extends the model into [Formula: see text] bidders when a high value bidder has fixed beliefs that all other bidders are identical types, and show how the value of information changes as the number of participants increases. Finally, this paper speculates on the possible changes in the efficiency of the model from increasing the valuation space to an arbitrary number. JEL Classification: D44, D82, D83

scholarly journals ENERGY EFFICENT AUCTION BASED DYNAMIC SPECTRUM ACCESS NETWORK

2017 ◽  
Vol 18 (1) ◽  
pp. 73-83
Author(s):  
Abdulkarim Ayopo Oloyede
Keyword(s):  
Dynamic Spectrum Access ◽  
Service Providers ◽  
Access Network ◽  
Radio Spectrum ◽  
Dynamic Spectrum ◽  
Spectrum Access ◽  
Reserve Price ◽  
Transmit Power ◽  
Wireless Users ◽  
Price Auction

A framework is proposed which is aimed at increasing the much needed revenue of the wireless service providers. The model uses the price paid by the wireless users to control the amount of energy consumed and the admission process based on a dynamic spectrum access network. The scheme is based on using a first price auction process with a reserve price to allocate the radio spectrum. It allows an opportunistic access to the white space in a manner that would protect the primary users in the system. The concept of green payment is used to penalise users who require high transmit power and subsidies those who require low transmit power. This work shows that with the proposed green payment in combination with the knowledge of the reserve price, the energy consumed and the delay in an auction based dynamic spectrum access network can be reduced.

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.

scholarly journals Online Second Price Auction with Semi-Bandit Feedback under the Non-Stationary Setting

2020 ◽  
Vol 34 (04) ◽  
pp. 6893-6900
Author(s):  
Zhao Haoyu ◽  
Chen Wei
Keyword(s):  
Time Horizon ◽  
Joint Distribution ◽  
Reserve Price ◽  
Total Revenue ◽  
Dynamic Case ◽  
Private Values ◽  
Price Auction ◽  
Second Price Auction ◽  
Private Value ◽  
Over Time

In this paper, we study the non-stationary online second price auction problem. We assume that the seller is selling the same type of items in T rounds by the second price auction, and she can set the reserve price in each round. In each round, the bidders draw their private values from a joint distribution unknown to the seller. Then, the seller announced the reserve price in this round. Next, bidders with private values higher than the announced reserve price in that round will report their values to the seller as their bids. The bidder with the highest bid larger than the reserved price would win the item and she will pay to the seller the price equal to the second-highest bid or the reserve price, whichever is larger. The seller wants to maximize her total revenue during the time horizon T while learning the distribution of private values over time. The problem is more challenging than the standard online learning scenario since the private value distribution is non-stationary, meaning that the distribution of bidders' private values may change over time, and we need to use the non-stationary regret to measure the performance of our algorithm. To our knowledge, this paper is the first to study the repeated auction in the non-stationary setting theoretically. Our algorithm achieves the non-stationary regret upper bound Õ(min{√S T, V¯⅓T⅔), where S is the number of switches in the distribution, and V¯ is the sum of total variation, and S and V¯ are not needed to be known by the algorithm. We also prove regret lower bounds Ω(√S T) in the switching case and Ω(V¯⅓T⅔) in the dynamic case, showing that our algorithm has nearly optimal non-stationary regret.

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.

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