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Optimal Bidding Strategies in Non-Sealed Bid Online Auctions of Common Products with Quantity Uncertainty

Author

Listed:
  • Chonawee Supatgiat

    (Tractebel North America)

  • John R. Birge

    (Northwestern University)

  • Rachel Q. Zhang

    (Cornell University)

Abstract

We consider non-sealed bid online auctions of common products with quantity uncertainty. Both first-price (also known as pay-as-you-bid) and uniform-price auctions are considered. In these auctions, all bidders have the same valuation of the products but may have different demand quantities. The number of units being auctioned can be random with a known and common distribution. Each bidder decides on a bidding price to maximize her profit. We derive Nash equilibrium solutions, i.e., bidders' optimal bidding strategies, and the resulting market clearing prices.

Suggested Citation

  • Chonawee Supatgiat & John R. Birge & Rachel Q. Zhang, 2002. "Optimal Bidding Strategies in Non-Sealed Bid Online Auctions of Common Products with Quantity Uncertainty," Game Theory and Information 0211005, University Library of Munich, Germany, revised 05 Mar 2003.
    • Handle: RePEc:wpa:wuwpga:0211005
    Note: Type of Document - pdf; pages: 32 . working paper, please give us your comments.
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    References listed on IDEAS

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    More about this item

    Keywords

    multi-unit auctions; pure common value auction; discrete bid level; bid increment; E-commerce;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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