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Private‐Value Auction Versus Posted‐Price Selling: An Agent‐Based Model Approach

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  • Christopher N. Boyer
  • B. Wade Brorsen
  • James R. Fain

Abstract

An agent‐based first‐price private‐value auction and an agent‐based posted‐price market are developed to compare these selling methods when buyers have private values. If the seller cannot impose a reserve price and has little uncertainty about the item's value, the seller's expected revenue is highest in the posted‐price market. Otherwise, the seller is better off selling the item with the auction. Using a genetic algorithm and Monte Carlo integration solved the agent‐based models quicker and provided more precise answers than solving models with particle swarm optimization and using the trapezoidal rule for numerical integration. Copyright © 2015 John Wiley & Sons, Ltd.

Suggested Citation

  • Christopher N. Boyer & B. Wade Brorsen & James R. Fain, 2015. "Private‐Value Auction Versus Posted‐Price Selling: An Agent‐Based Model Approach," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 249-262, October.
    • Handle: RePEc:wly:isacfm:v:22:y:2015:i:4:p:249-262
    DOI: 10.1002/isaf.1381
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    References listed on IDEAS

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    Cited by:

    1. Carlos M. Fernández‐Márquez & Francisco J. Vázquez, 2018. "How information and communication technology affects decision‐making on innovation diffusion: An agent‐based modelling approach," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 25(3), pages 124-133, July.

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