Reading for Today
- Thinking Strategically (Avinash Dixit and Barry
Nalebuff), Chapter 12, Incentives, pp. 319-325.
- McMillan, John, ``Bidding in Competition,'' pp. 133-149 of
Games, Strategies, and Managers, Oxford: Oxford
University Press, 1992.
- "The Bank of Sweden Prize in Economic Sciences in Honor of
1996," (Mirrlees, Vickrey), Nobel Foundation press release, October
The big problem is to win the auction without paying more than
the object is worth to you.
The big problem is to win the auction without paying much more than
the next highest bidder.
Topics That Might be Discussed in Class
- Auctions vs. Bargaining
- Private Versus Common Value Auctions
- Open vs. Sealed-Bid Auctions
- The Winner's Curse
- Bidding Conspiracies
Private and Common Value Auctions,
Open Cry vs. Sealed Bid Auctions,
The Winner's Curse.
For Next Time
- Rasmusen, Eric, "Strategic Implications of Uncertainty Over
Private Value in Auctions," Indiana University, Dept. of Business
and Public Policy, October 31, 2001, http:
//php.indiana.edu/~erasmuse/papers/auction.pdf (November 19,
- Roth, Alvin E. & Axel Ockenfels (2000) ``Last Minute Bidding
Rules For Ending Second-Price Auctions: Theory And Evidence From A
Experiment On The Internet,'' NBER Working Paper 7729, June 2000, http:
- Agora Market Design, Inc. Principals-- for how theory and
- The powerpoint slides and latex-pdf slides on
auction rules, optimal sealed-bid bidding, and key lessons.
- Rasmusen, Eric, "Managerial Conservatism and Rational
Acquisition, " Journal of Economics and Management
Strategy (Spring 1992) 1: 175-202. In Acrobat. How the winner's curse explains the use of high hurdle
rates in capital budgeting.
Return to the Thinking Strategically Home
Page at http://pacioli.bus.indiana.edu/erasmuse/g570/g570.htm.
Send comments to Prof.
. Last updated: April 24, 2002.