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A Vickrey auction is decision efficient (the winner is the bidder with the highest valuation) under the most general circumstances; [citation needed] it thus provides a baseline model against which the efficiency properties of other types of auctions can be posited. It is only ex-post efficient (sum of transfers equal to zero) if the seller is ...
A well-known special case is the Vickrey auction, or the sealed second-bid auction. Here, there is only a single item, and the set contains + possible outcomes: either sell the item to one of the agents, or not to sell it at all. In step 3, the winner agent is paid 0 (since the total value of the others is 0) and the losers receive a payment ...
A Vickrey–Clarke–Groves (VCG) auction is a type of sealed-bid auction of multiple items. Bidders submit bids that report their valuations for the items, without knowing the bids of the other bidders. The auction system assigns the items in a socially optimal manner: it charges each individual the harm they cause to other bidders. [1]
[52] [53] What are effectively sealed first-price auctions are commonly called tendering for procurement by companies and organisations, particularly for government contracts and auctions for mining leases. [2] Vickrey auction, also known as a sealed-bid second-price auction. [54]
A simple example of a WBB mechanism is the Vickrey auction, in which the operator wants to sell an object to one of n potential buyers. Each potential buyer bids a value, the highest bidder wins an object and pays the second-highest bid. As all bids are positive, the total payment is trivially positive too.
The generalized second-price auction (GSP) is a non-truthful auction mechanism for multiple items. Each bidder places a bid. The highest bidder gets the first slot, the second-highest, the second slot and so on, but the highest bidder pays the price bid by the second-highest bidder, the second-highest pays the price bid by the third-highest, and so on.
Vickrey was the first to use the tools of game theory to explain the dynamics of auctions. [5] In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. The revenue equivalence theorem remains the centrepiece of modern auction theory. The Vickrey auction is named after him. [5]
From the subject's perspective, the method is equivalent to a Vickrey auction against an unknown bidder. BDM's incentive compatibility is a well established theoretical result, and it relies on similar arguments to that of the Vickrey auction. When one considers uncertainty in WTP, the incentive-compatibility of BDM will no longer hold. [2]
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