Abstract
Lowest-unique sealed-bid auctions are auctions with endogenous participation, costly bids, and the lowest bid among all unique bids wins. Properties of symmetric NEs are studied. The symmetric NE with the lowest expected gains is the maximin outcome under symmetric strategies, and it is the solution to a mathematical program. Comparative statics for the number of bidders, the value of the item and the bidding cost are derived. The two bidders’ auction is equivalent to the Hawk–Dove game. Simulations of replicator dynamics provide numerical evidence that the symmetric NE with the lowest expected gains is also asymptotically stable.
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Acknowledgments
We are grateful to Quan Wen and Gerard van der Laan for valuable suggestions.
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This article expresses the personal views and opinions of the authors. Please note that SNS Reaal neither advocates nor endorses the use of the presented techniques to analyze this type of auction.
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Houba, H., van der Laan, D. & Veldhuizen, D. Endogenous entry in lowest-unique sealed-bid auctions. Theory Decis 71, 269–295 (2011). https://doi.org/10.1007/s11238-010-9196-5
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DOI: https://doi.org/10.1007/s11238-010-9196-5