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A Bayesian Approach to an Individual Player's Choice of Bid in Competitive Sealed Auctions

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  • Irving H. Lavalle

    (Tulane University)

Abstract

A general approach to the decision problem confronting the individual player in a noncooperative game is outlined and applied to one player's choice of bid in a competitive sealed auction for a valuable object. That player's Bayes-optimal bid is characterized under both general and specific assumptions as to the subjective probability distributions expressing his judgments. Under the specific assumptions, analytically tractable results (in terms of Gamma fractiles) are presented. Equilibrium and maximin bids are presented for comparative purposes.

Suggested Citation

  • Irving H. Lavalle, 1967. "A Bayesian Approach to an Individual Player's Choice of Bid in Competitive Sealed Auctions," Management Science, INFORMS, vol. 13(7), pages 584-597, March.
    • Handle: RePEc:inm:ormnsc:v:13:y:1967:i:7:p:584-597
    DOI: 10.1287/mnsc.13.7.584
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    Cited by:

    1. Richard Engelbrecht-Wiggans, 1979. "Auctions and Bidding Models: A Survey," Cowles Foundation Discussion Papers 496R, Cowles Foundation for Research in Economics, Yale University.
    2. Swider, Derk J. & Weber, Christoph, 2007. "Bidding under price uncertainty in multi-unit pay-as-bid procurement auctions for power systems reserve," European Journal of Operational Research, Elsevier, vol. 181(3), pages 1297-1308, September.

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