scholarly journals Basic Bidding Formats: Characteristics and Differences

2021 ◽  
Vol 72 (3) ◽  
pp. 183-197
Author(s):  
Fritz Helmedag
Keyword(s):  
Probability Theory ◽  
Equivalence Theorem ◽  
Auction Theory ◽  
Reserve Price ◽  
Decision Situation ◽  
Revenue Equivalence ◽  
Operating Modes ◽  
Course Of Action ◽  
Allocation Methods

Abstract In standard auction theory, the ‘revenue equivalence theorem’ asserts that the outcomes of the elementary allocation methods coincide. However, bidding processes differ fundamentally with regard to the decision situation of the participants: Is it at all imperative to take into consideration the number of competitors (‘stochastic’ strategy) or not (‘deterministic’ course of action)? Furthermore, established auction theory neglects the operating modes of procurement alternatives under uncertainty. Apart from the lacking knowledge how many rivals have to be beaten, tenderers regularly are ignorant of the buyer’s reserve price. Then it is even more tentative to calculate an offer based on probability theory. Consequently, the suppliers’ propensity to collude increases.

scholarly journals A measure of the variability of revenue in auctions: A look at the revenue equivalence theorem

2006 ◽  
Vol 2006 ◽  
pp. 1-14 ◽  
Author(s):  
Fernando Beltrán ◽  
Natalia Santamaría
Keyword(s):  
Equivalence Theorem ◽  
Auction Theory ◽  
Two Dimensions ◽  
Revenue Equivalence ◽  
Extensive Simulation ◽  
Value Set ◽  
Equilibrium Bidding ◽  
The One

One not-so-intuitive result in auction theory is the revenue equivalence theorem, which states that as long as an auction complies with some conditions, it will on average generate the same revenue to an auctioneer as the revenue generated by any other auction that complies with them. Surprisingly, the conditions are not defined on the payment rules to the bidders but on the fact that the bidders do not bid below a reserve value—set by the auctioneer—the winner is the one with the highest bidding and there is a common equilibrium bidding function used by all bidders. In this paper, we verify such result using extensive simulation of a broad range of auctions and focus on the variability or fluctuations of the results around the average. Such fluctuations are observed and measured in two dimensions for each type of auction: as the number of auctions grows and as the number of bidders increases.

A revenue-equivalence theorem for electricity auctions

2004 ◽  
Vol 41 (02) ◽  
pp. 299-312 ◽  
Author(s):  
Juri Hinz
Keyword(s):  
Real Time ◽  
Electricity Markets ◽  
Real World ◽  
Electricity Market ◽  
Equivalence Theorem ◽  
Revenue Equivalence ◽  
The Real ◽  
Electricity Auctions ◽  
Key Features ◽  
Total Payment

The purpose of this paper is to analyse the real-time trading of electricity. We address a model for an auction-like trading which captures key features of real-world electricity markets. Our main result establishes that, under certain conditions, the expected total payment for electricity is independent of the particular auction type. This result is analogous to the revenue-equivalence theorem known for classical auctions and could contribute to an improved understanding of different electricity market designs and their comparison.

The Six-Sentence Argument: Training Critical Thinking Skills Using Peer Review

2017 ◽  
Vol 3 (2) ◽  
pp. 118-128
Author(s):  
Julian Kölbel ◽  
Erik Jentges
Keyword(s):  
Critical Thinking ◽  
Peer Review ◽  
Real World ◽  
Logical Structure ◽  
Thinking Skills ◽  
Critical Thinking Skills ◽  
Decision Situation ◽  
Course Of Action

The six-sentence argument (6SA) is an exercise to train critical thinking skills. Faced with a decision situation, students argue for their preferred course of action using a logical structure of exactly six sentences. Through a guided peer review, students engage critically with other students’ arguments and receive detailed feedback on their own arguments. This exercise helps students craft convincing arguments and reflect on their reasoning in a format that can be applied in real-world situations. A key strength of the six-sentence argument exercise is that it can be administered online and is scalable for large courses with little additional workload for the instructor.

A revenue-equivalence theorem for electricity auctions

2004 ◽  
Vol 41 (2) ◽  
pp. 299-312 ◽  
Author(s):  
Juri Hinz
Keyword(s):  
Real Time ◽  
Electricity Markets ◽  
Real World ◽  
Electricity Market ◽  
Equivalence Theorem ◽  
Revenue Equivalence ◽  
The Real ◽  
Electricity Auctions ◽  
Key Features ◽  
Total Payment

The purpose of this paper is to analyse the real-time trading of electricity. We address a model for an auction-like trading which captures key features of real-world electricity markets. Our main result establishes that, under certain conditions, the expected total payment for electricity is independent of the particular auction type. This result is analogous to the revenue-equivalence theorem known for classical auctions and could contribute to an improved understanding of different electricity market designs and their comparison.

scholarly journals The Generalized War of Attrition

1999 ◽  
Vol 89 (1) ◽  
pp. 175-189 ◽  
Author(s):  
Jeremy Bulow ◽  
Paul Klemperer
Keyword(s):  
Private Information ◽  
Exit Time ◽  
Winning Coalition ◽  
Standard Setting ◽  
Equivalence Theorem ◽  
Drop Out ◽  
Revenue Equivalence ◽  
War Of Attrition

We model a war of attrition with N + K firms competing for N prizes. In a “natural oligopoly” context, the K − 1 lowest-value firms drop out instantaneously, even though each firm's value is private information to itself. In a “standard setting” context, in which every competitor suffers losses until a standard is chosen, even after giving up on its own preferred alternative, each firm's exit time is independent both of K and of other players' actions. Our results explain how long it takes to form a winning coalition in politics. Solving the model is facilitated by the Revenue Equivalence Theorem. (JEL D43, D44, L13, O30)

Multiple-Object Auctions Around a Circle

2004 ◽  
Vol 4 (1) ◽  
Author(s):  
Qinghua Zhang
Keyword(s):  
Unit Circle ◽  
Equivalence Theorem ◽  
Capacity Constraint ◽  
Allocation Rule ◽  
Regularity Conditions ◽  
Revenue Equivalence ◽  
Incentive Compatible ◽  
Multiple Object ◽  
Ex Post ◽  
Auction Mechanisms

This paper explores a multiple-object auction with the following three features: First, there is a capacity constraint, as each bidder can win at most one object from the auction. Second, the objects for sale and the bidders are located around the unit circle. A bidder's valuation of a certain object depends solely on the location of the object relative to the bidder; that is, on the distance between the object and the bidder. Third, instead of turning in separate bids on different objects, each bidder just states his location on the unit circle. His bids on different objects can then be derived from his stated location.The paper demonstrates that the Groves-Clarke logic applies to this particular setting, and it designs an auction mechanism that is ex-post efficient, under the capacity constraint, and incentive compatible. The paper also extends the Revenue Equivalence Theorem to this particular setting, using a proof different from Engelbrecht-Wiggans'(1988), by imposing less strict regularity conditions. Based on the circle setting, the paper shows that, with symmetric bidders, for any two different auction mechanisms applying the same allocation rule, the locations on the circle at which a bidder obtains the lowest expected payoff from either of these two mechanisms are the same. This location serves as the benchmark location to the circle version of the Revenue Equivalence Theorem in this paper.

Sequential First-Price Auction with Randomly Arriving Buyers

2018 ◽  
Vol 6 (1) ◽  
pp. 29-34
Author(s):  
Shulin Liu ◽  
Xiaohu Han
Keyword(s):  
Dynamic Model ◽  
Equivalence Theorem ◽  
Bidding Strategy ◽  
Revenue Equivalence ◽  
Dynamic Markets ◽  
Differentiated Goods ◽  
Price Auction ◽  
Second Price Auction ◽  
Equilibrium Bidding ◽  
Model Setting

AbstractIn this paper we reanalyze Said’s (2011) work by retaining all his assumptions except that we use the first-price auction to sell differentiated goods to buyers in dynamic markets instead of the second-price auction. We conclude that except for the expression of the equilibrium bidding strategy, all the results for the first-price auction are exactly the same as the corresponding ones for the second-price auction established by Said (2011). This implies that the well-known “revenue equivalence theorem” holds true for Said’s (2011) dynamic model setting.

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