Optimal bidding in auctions from a game theory perspective

Panos L. Lorentziadis

European Journal of Operational Research, 2016, vol. 248, issue 2, 347-371

Abstract: The game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions. Tracing this research, we review key recent advances, which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding. We follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited. For this reason, we concentrate on research themes, which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors. We identify important innovations, which expand the environment of auction bidding and carry us beyond rational decision making. We conclude providing directions of future research and discussing their implications.

Keywords: Auction bidding; Game theory; Asymmetry; Collusion; Irrationality (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:248:y:2016:i:2:p:347-371

DOI: 10.1016/j.ejor.2015.08.012

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