Theoretical approaches to lowest unique bid auctions

Miguel Costa-Gomes; Makoto Shimoji

doi:10.1016/j.jmateco.2014.02.011

Theoretical approaches to lowest unique bid auctions

Miguel Costa-Gomes, Makoto Shimoji

School of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

In this paper, we analyze a game called the lowest unique bid auction (LUBA). It is known that there is no closed form solution for the symmetric mixed strategy equilibria in LUBA. We propose two alternative approaches. We use weak dominance to identify upper bounds for players’ bids. Under symmetry, we provide a method to compute a mixed strategy equilibrium by utilizing the recursive structure of the winning chances of the bids under one assumption.

Original language	English
Pages (from-to)	16-24
Number of pages	9
Journal	Journal of Mathematical Economics
Volume	52
Early online date	18 Mar 2014
DOIs	https://doi.org/10.1016/j.jmateco.2014.02.011
Publication status	Published - May 2014

Keywords / Materials (for Non-textual outputs)

auction
weak dominance
computation

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10.1016/j.jmateco.2014.02.011

1 Working paper

Theoretical Approaches to Lowest Unique Bid Auctions
Costa-Gomes, M. & Shimoji, M., 26 Aug 2013.
Research output: Working paper

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title = "Theoretical approaches to lowest unique bid auctions",

abstract = "In this paper, we analyze a game called the lowest unique bid auction (LUBA). It is known that there is no closed form solution for the symmetric mixed strategy equilibria in LUBA. We propose two alternative approaches. We use weak dominance to identify upper bounds for players{\textquoteright} bids. Under symmetry, we provide a method to compute a mixed strategy equilibrium by utilizing the recursive structure of the winning chances of the bids under one assumption.",

keywords = "auction, weak dominance, computation",

author = "Miguel Costa-Gomes and Makoto Shimoji",

year = "2014",

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AB - In this paper, we analyze a game called the lowest unique bid auction (LUBA). It is known that there is no closed form solution for the symmetric mixed strategy equilibria in LUBA. We propose two alternative approaches. We use weak dominance to identify upper bounds for players’ bids. Under symmetry, we provide a method to compute a mixed strategy equilibrium by utilizing the recursive structure of the winning chances of the bids under one assumption.

KW - auction

KW - weak dominance

KW - computation

U2 - 10.1016/j.jmateco.2014.02.011

DO - 10.1016/j.jmateco.2014.02.011

M3 - Article

SN - 0304-4068

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SP - 16

EP - 24

JO - Journal of Mathematical Economics

JF - Journal of Mathematical Economics

ER -

Theoretical approaches to lowest unique bid auctions

Abstract

Keywords / Materials (for Non-textual outputs)

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Research output

Theoretical Approaches to Lowest Unique Bid Auctions

Cite this