Simulating Auctions

Konrad Richter ()
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Konrad Richter: University of Kiel and McKinsey&Co

A chapter in The Complex Networks of Economic Interactions, 2006, pp 209-223 from Springer

Abstract: Summary Current auction theory relies crucially on the assumption that all bidders bid homogeneously according to their Nash Equilibrium bidding strategies. However, it remains silent on whether and how a priori heterogeneous bidders arrive at the NE. This paper investigates computationally whether evolutionary learning in repeated auctions could justify the assumption of NE bidding. Simulations show that Best Response learning of a priori heterogeneous bidders in first-price auctions does not converge to the NE. Instead, bidders involve in permanent mutual adaptation that shows non trivial characteristics.

Keywords: Nash Equilibrium; Average Strategy; Bidding Strategy; Price Auction; Auction Format (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-28727-8_14

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DOI: 10.1007/3-540-28727-2_14

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