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On Multiplicative Bidding Strategies

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  • Michael H. Rothkopf

    (Xerox Corporation, Palo Alto, California)

Abstract

Some models of competitive bidding consider only bidding strategies in which the bid is a preselected multiple of an estimate of the value (or cost) of the subject of the auction. This paper examines the effect of such a restriction on these models. In order to do so, it is necessary to show that the ratio of two positive random variables (e.g., a cost and a cost estimate) cannot be statistically independent of each of them unless the ratio is always the same.

Suggested Citation

  • Michael H. Rothkopf, 1980. "On Multiplicative Bidding Strategies," Operations Research, INFORMS, vol. 28(3-part-i), pages 570-575, June.
    • Handle: RePEc:inm:oropre:v:28:y:1980:i:3-part-i:p:570-575
    DOI: 10.1287/opre.28.3.570
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    Cited by:

    1. Max H. Bazerman & William F. Samuelson, 1983. "I Won the Auction But Don't Want the Prize," Journal of Conflict Resolution, Peace Science Society (International), vol. 27(4), pages 618-634, December.
    2. Martin Skitmore & Goran Runeson & Xinling Chang, 2006. "Construction price formation: full-cost pricing or neoclassical microeconomic theory?," Construction Management and Economics, Taylor & Francis Journals, vol. 24(7), pages 773-783.
    3. Mordechai E. Schwarz, 2021. "Auctions with endogenous opting‐out fees and recursive winning procedures from the Talmud," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(4), pages 345-374, December.

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