Lecture 10. Auction Theory
Recommended reading : 【Microeconomics】 Microeconomics Table of Contents
1. Meaning of auctions
2. Auction formats
3. Winner’s curse
1. Meaning of auctions
⑴ Auction : An open sale method in which an item is sold to the person who offers the highest price.
⑵ Auction theory : Studies strategic behavior under conditions where information is not fully available. Topic of the 2020 Nobel Prize in Economic Sciences
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② It is classified into a first-price sealed-bid auction and a second-price sealed-bid auction.
3. Winner’s curse
⑴ In a first-price sealed-bid auction, bidders have an incentive to shade their bids downward.
① Incentive 1. Fear of submitting too high a bid
② Incentive 2. Incentive to collude on prices
⑵ In a second-price sealed-bid auction, that incentive becomes weaker.
Entered: 2020.11.02 18:22