Rational Bidding Strategies

Abstract

Imagine you are bidding at an English auction in a traditional auction house. The item is an antique jewelry case meant to be a birthday present for your wife. You have a concrete idea of how much you want to pay maximum for it, because you have already found a case somewhere else that would cost 150 euros. However, its style and condition are not quite as nice as that offered in the auction. But you will not bid more than 150 euros in any case, because it is not a special birthday with a round number.