|
Common Value Auction
In common value auctions the value of the item for sale is identical amongst bidders, but bidders have different information about the item's value. This stands in contrast to a private value auction where each bidder's private valuation of the item is different and independent of peers' valuations. A classic example of a pure common values auction is when a jar full of quarters is auctioned off. The jar will be worth the same amount to anyone. However, each bidder has a different guess about how many quarters are in the jar. Other, real-life examples include Treasury bill auctions, initial public offerings, spectrum auctions, very prized paintings, art pieces, antiques etc. One important phenomenon occurring in common value auctions is the winner's curse. Bidders have only estimates of the value of the good. If, on average, bidders are estimating correctly, the highest bid will tend to have been placed by someone who overestimated the good's value. This is an example of adverse s ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory. The open ascending price auction is arguably the most common form of auction and has been used throughout history. Participants bid openly against one another, with each subsequent bid being higher than the previous bid. An auctioneer may announce prices, while bidders submit bids vocally or electronically. Auctions are applied for trade in diverse contexts. These contexts include antiques, paintings, rare collectibles, expensive wines, commodities, livestock, radio spectrum, used cars, real estate, online advertising, vacation packages, emission trading, a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Continuous Uniform Distribution
In probability theory and statistics, the continuous uniform distribution or rectangular distribution is a family of symmetric probability distributions. The distribution describes an experiment where there is an arbitrary outcome that lies between certain bounds. The bounds are defined by the parameters, ''a'' and ''b'', which are the minimum and maximum values. The interval can either be closed (e.g. , b or open (e.g. (a, b)). Therefore, the distribution is often abbreviated ''U'' (''a'', ''b''), where U stands for uniform distribution. The difference between the bounds defines the interval length; all intervals of the same length on the distribution's support are equally probable. It is the maximum entropy probability distribution for a random variable ''X'' under no constraint other than that it is contained in the distribution's support. Definitions Probability density function The probability density function of the continuous uniform distribution is: : f(x)=\begin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monopoly
A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a specific person or company, enterprise is the only supplier of a particular thing. This contrasts with a monopsony which relates to a single entity's control of a Market (economics), market to purchase a good or service, and with oligopoly and duopoly which consists of a few sellers dominating a market. Monopolies are thus characterized by a lack of economic Competition (economics), competition to produce the good (economics), good or Service (economics), service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. The verb ''monopolise'' or ''monopolize'' refers to the ''process'' by which a company gains the ability to raise ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bertrand Competition
Bertrand competition is a model of competition used in economics, named after Joseph Louis François Bertrand (1822–1900). It describes interactions among firms (sellers) that set prices and their customers (buyers) that choose quantities at the prices set. The model was formulated in 1883 by Bertrand in a review of Antoine Augustin Cournot's book ''Recherches sur les Principes Mathématiques de la Théorie des Richesses'' (1838) in which Cournot had put forward the Cournot model. Cournot's model argued that each firm should maximise its profit by selecting a quantity level and then adjusting price level to sell that quantity. The outcome of the model equilibrium involved firms pricing above marginal cost; hence, the competitive price. In his review, Bertrand argued that each firm should instead maximise its profits by selecting a price level that undercuts its competitors' prices, when their prices exceed marginal cost. The model was not formalized by Bertrand; however, the idea ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Revenue Equivalence
Revenue equivalence is a concept in auction theory that states that given certain conditions, any mechanism that results in the same outcomes (i.e. allocates items to the same bidders) also has the same expected revenue. Notation There is a set X of possible outcomes. There are n agents which have different valuations for each outcome. The valuation of agent i (also called its "type") is represented as a function: : v_i : X \longrightarrow R_ which expresses the value it has for each alternative, in monetary terms. The agents have quasilinear utility functions; this means that, if the outcome is x and in addition the agent receives a payment p_i (positive or negative), then the total utility of agent i is: : u_i := v_i(x) + p_i The vector of all value-functions is denoted by v. For every agent i, the vector of all value-functions of the ''other'' agents is denoted by v_. So v \equiv (v_i,v_). A ''mechanism'' is a pair of functions: * An Outcome function, that takes as inpu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Japanese Auction
A Japanese auction (also called ascending clock auction) is a dynamic auction format. It proceeds in the following way. * An initial price is displayed. This is usually a low price - it may be either 0 or the seller's reserve price. * All buyers that are interested in buying the item at the displayed price enter the auction arena. * The displayed price increases continuously, or by small discrete steps (e.g. one cent per second). * Each buyer may exit the arena at any moment. * No exiting buyer is allowed to re-enter the arena. * When a single buyer remains in the arena, the auction stops. The remaining buyer wins the item and pays the displayed price. Strategies Suppose a buyer believes that the value of the item is ''v''. Then this buyer has a simple dominant strategy: stay in the arena as long as the displayed price is below ''v''; exit the arena whenever the displayed price equals ''v''. This means that the Japanese auction is a truthful mechanism: it is always best to act ac ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fundamental Theorem Of Calculus
The fundamental theorem of calculus is a theorem that links the concept of differentiating a function (calculating its slopes, or rate of change at each time) with the concept of integrating a function (calculating the area under its graph, or the cumulative effect of small contributions). The two operations are inverses of each other apart from a constant value which depends on where one starts to compute area. The first part of the theorem, the first fundamental theorem of calculus, states that for a function , an antiderivative or indefinite integral may be obtained as the integral of over an interval with a variable upper bound. This implies the existence of antiderivatives for continuous functions. Conversely, the second part of the theorem, the second fundamental theorem of calculus, states that the integral of a function over a fixed interval is equal to the change of any antiderivative between the ends of the interval. This greatly simplifies the calculation of a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Second-price Auction
A Vickrey auction or sealed-bid second-price auction (SBSPA) is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest bid. This type of auction is strategically similar to an English auction and gives bidders an incentive to bid their true value. The auction was first described academically by Columbia University professor William Vickrey in 1961 though it had been used by stamp collectors since 1893. In 1797 Johann Wolfgang von Goethe sold a manuscript using a sealed-bid, second-price auction. Vickrey's original paper mainly considered auctions where only a single, indivisible good is being sold. The terms ''Vickrey auction'' and ''second-price sealed-bid auction'' are, in this case only, equivalent and used interchangeably. In the case of multiple identical goods, the bidders submit inverse demand curves and pay the opportunity cost. Vickrey auctions ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
English Auction
An English auction is an open-outcry ascending dynamic auction. It proceeds as follows. * The auctioneer opens the auction by announcing a suggested opening bid, a starting price or reserve for the item on sale. * Then the auctioneer accepts increasingly higher bids from the floor and sometimes from other sources, for example online or telephone bids, consisting of buyers with an interest in the item. The auctioneer usually determines the minimum increment of bids, often making them larger as bidding reaches higher levels. * The highest bidder at any given moment is considered to have the standing bid, which can only be displaced by a higher bid from a competing buyer. * If no competing bidder challenges the standing bid within the time allowed by the auctioneer, the standing bid becomes the winner, and the item is sold to the highest bidder at a price equal to their bid. *If no bidder accepts the starting price, the auctioneer either begins to lower the starting price in increme ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Jump Bidding
In auction theory, jump bidding is the practice of increasing the current price in an English auction, substantially more than the minimal allowed amount. Puzzle At first glance, jump bidding seems irrational. Apparently, in an English auction, it is a dominant strategy for each buyer whose price is above the displayed price, to always bid the minimal allowed increment (e.g. one cent) above the displayed price. By bidding higher, the bidder gives up the opportunity to win the item at a lower price. However, in practice buyers increase the displayed price much more than the minimal allowed increment. Buyers may even sometimes offer an increase on their own high bid, seemingly irrationally. Several explanations have been suggested to this behavior. Reducing bidding costs When bidding is costly, or when time is costly, jump-bidding allows the bidders to reduce their total costs and get to the outcome faster. Signaling Consider two veteran bidders, that compete with each ot ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Second-price Sealed-bid Auction
A Vickrey auction or sealed-bid second-price auction (SBSPA) is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest bid. This type of auction is strategically similar to an English auction and gives bidders an incentive to bid their true value. The auction was first described academically by Columbia University professor William Vickrey in 1961 though it had been used by stamp collectors since 1893. In 1797 Johann Wolfgang von Goethe sold a manuscript using a sealed-bid, second-price auction. Vickrey's original paper mainly considered auctions where only a single, indivisible good is being sold. The terms ''Vickrey auction'' and ''second-price sealed-bid auction'' are, in this case only, equivalent and used interchangeably. In the case of multiple identical goods, the bidders submit inverse demand curves and pay the opportunity cost. Vickrey auctions ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
