Robust Bidding in First-Price Auctions: How to Bid Without Knowing What Others Are Doing
- Author(s)
- Bernhard Kasberger, Karl Schlag
- Abstract
We propose how to bid in first-price auctions when a bidder knows the own value but not how others will bid. To do this, we introduce a methodology to show how to make choices in strategic settings without assuming common knowledge or equilibrium behavior. Accordingly, we first eliminate environments that are believed not to occur and then find a robust rule that performs well in the remaining environments. We test our bids using data from laboratory experiments and the field and find that our bids outperform those made by real bidders.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Heinrich-Heine-Universität Düsseldorf
- Journal
- Management Science
- ISSN
- 0025-1909
- DOI
- https://doi.org/10.1287/mnsc.2023.4899
- Publication date
- 08-2023
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502047 Economic theory
- Keywords
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/robust-bidding-in-firstprice-auctions-how-to-bid-without-knowing-what-others-are-doing(2076489c-86f0-49db-a700-9e53c7f2639f).html