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Optimal bidding strategies for simultaneous Vickrey auctions with perfect substitutes

Optimal bidding strategies for simultaneous Vickrey auctions with perfect substitutes
Optimal bidding strategies for simultaneous Vickrey auctions with perfect substitutes
In this paper, we derive optimal bidding strategies for a global bidder who participates in multiple, simultaneous second-price auctions with perfect substitutes. We first consider a model where all other bidders are local and participate in a single auction. For this case, we prove that, assuming free disposal, the global bidder should always place non-zero bids in all available auctions, irrespective of the local bidders’ valuation distribution. Furthermore, for nondecreasing valuation distributions, we prove that the problem of finding the optimal bids reduces to two dimensions. These results hold both in the case where the number of local bidders is known and when this number is determined by a Poisson distribution. In addition, by combining analytical and simulation results, we demonstrate that similar results hold in the case of several global bidders, provided that the market consists of both global and local bidders. Finally, we address the efficiency of the overall market, and show that information about the number of local bidders is an important determinant for the way in which a global bidder affects efficiency.
Simultaneous Auctions, Perfect Substitutes, Bidding Strategies, Vickrey Auction, Multiple Sellers, Market Efficiency
10-17
Gerding, E.H.
d9e92ee5-1a8c-4467-a689-8363e7743362
Dash, R.K.
688bf118-f42f-42bc-80f7-e915330f85d5
Yuen, D.C.K.
81f5adac-bf24-4bcc-bcf4-86f0646155ce
Jennings, N. R.
ab3d94cc-247c-4545-9d1e-65873d6cdb30
Gerding, E.H.
d9e92ee5-1a8c-4467-a689-8363e7743362
Dash, R.K.
688bf118-f42f-42bc-80f7-e915330f85d5
Yuen, D.C.K.
81f5adac-bf24-4bcc-bcf4-86f0646155ce
Jennings, N. R.
ab3d94cc-247c-4545-9d1e-65873d6cdb30

Gerding, E.H., Dash, R.K., Yuen, D.C.K. and Jennings, N. R. (2006) Optimal bidding strategies for simultaneous Vickrey auctions with perfect substitutes. 8th Int. Workshop on Game Theoretic and Decision Theoretic Agents, Hakodate, Japan. pp. 10-17 .

Record type: Conference or Workshop Item (Paper)

Abstract

In this paper, we derive optimal bidding strategies for a global bidder who participates in multiple, simultaneous second-price auctions with perfect substitutes. We first consider a model where all other bidders are local and participate in a single auction. For this case, we prove that, assuming free disposal, the global bidder should always place non-zero bids in all available auctions, irrespective of the local bidders’ valuation distribution. Furthermore, for nondecreasing valuation distributions, we prove that the problem of finding the optimal bids reduces to two dimensions. These results hold both in the case where the number of local bidders is known and when this number is determined by a Poisson distribution. In addition, by combining analytical and simulation results, we demonstrate that similar results hold in the case of several global bidders, provided that the market consists of both global and local bidders. Finally, we address the efficiency of the overall market, and show that information about the number of local bidders is an important determinant for the way in which a global bidder affects efficiency.

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More information

Published date: 2006
Venue - Dates: 8th Int. Workshop on Game Theoretic and Decision Theoretic Agents, Hakodate, Japan, 2006-01-01
Keywords: Simultaneous Auctions, Perfect Substitutes, Bidding Strategies, Vickrey Auction, Multiple Sellers, Market Efficiency
Organisations: Agents, Interactions & Complexity

Identifiers

Local EPrints ID: 262586
URI: http://eprints.soton.ac.uk/id/eprint/262586
PURE UUID: 050912fa-eaa8-4e67-9a5c-7294ac2bdc2f
ORCID for E.H. Gerding: ORCID iD orcid.org/0000-0001-7200-552X

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Date deposited: 16 May 2006
Last modified: 25 Jun 2020 00:29

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Contributors

Author: E.H. Gerding ORCID iD
Author: R.K. Dash
Author: D.C.K. Yuen
Author: N. R. Jennings

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