Abstract
Consider a bidder who, subject only to a constraint on his choice of bidding strategy, will choose a strategy that maximizes his expected gross receipts. The bidder's choice of strategy may be constrained by an upper limit on exposure, an upper limit on expected expenditures, or a lower limit on expected profits. We prove that constraining the bidder only by an appropriate upper limit on expected expenditures in effect limits him to expected profit maximizing strategies; in many examples, expected profit maximizing strategies can not be induced by solely limiting the bidder's exposure.
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Engelbrecht-Wiggans, R. Optimal constrained bidding. Int J Game Theory 16, 115–121 (1987). https://doi.org/10.1007/BF01780636
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DOI: https://doi.org/10.1007/BF01780636