On bidding for a fixed number of items in a sequence of auctions

Michael N. Katehakis and Kartikeya S. Puranam

European Journal of Operational Research, 2012, vol. 222, issue 1, 76-84

Abstract: We consider the problem of a firm (“the buyer”) that must acquire a fixed number (L) of items. The buyer can acquire these items either at a fixed buy-it-now price in the open market or by participating in a sequence of N>L auctions. The objective of the buyer is to minimize his expected total cost for acquiring all L items. We model this problem as a Markov Decision Process and establish monotonicity properties for the optimal value function and the optimal bidding strategies.

Keywords: Stochastic processes; Dynamic programming; Markov Decision Processes; Auctions/bidding (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:222:y:2012:i:1:p:76-84

DOI: 10.1016/j.ejor.2012.03.050

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