 Optimal bidding in auctions of mixed populations of biddersPanos L. Lorentziadis European Journal of Operational Research, 2012, vol. 217, issue 3, 653-663 Abstract: A mixed population of bidders consists of two asymmetric groups. Members of the first group are game-theoretic players, who maximize their expected profit and incorrectly believe that their opponents act similarly. The second group of bidders adopts an irrational strategy: they either choose their bids randomly following a given probability distribution, in a “naïve” form of bidding, or follow a decision-theoretic approach, maximizing their expected profit under the assumption that all other bids are random. In a sealed bid private-value procurement auction we examine the optimal strategy of a new player, who has perfect knowledge of the structure of the mixed bidder population and enters the auction. The optimal bid of the new bidder is derived when the cost and mark-up follow a uniform distribution in [0,1]. The effect of the relative size of the group of game-theoretic bidders and the population size on the optimal bid price is established. Keywords: Asymmetric auctions; Optimal bidding; Mixed bidder population; Game-theoretic model; Decision-theoretic model; Irrationality (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:217:y:2012:i:3:p:653-663 DOI: 10.1016/j.ejor.2011.07.047 Access Statistics for this article European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati More articles in European Journal of Operational Research from Elsevier |
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