Table of Contents
What is strategic equivalence?
The idea of strategic equivalence is that some auctions which superficially appear to be quite different from each other actually present bidderss with exactly the same set of alternative choices; hence the Bayesian Nash Equilibrium bidding strategies for the auctions will be the same.
Under which conditions all standard auctions would yield the same expected revenue?
Theorem 2 If there are N bidders with values drawn from a continuous dis# tribution (e.g. uniform on ,a, b-), then any standard auction leads to the same expected revenue, and same expected bidder profit, as a second#price auction.
Is auction theory part of game theory?
A game-theoretic auction model is a mathematical game represented by a set of players, a set of actions (strategies) available to each player, and a payoff vector corresponding to each combination of strategies. Generally, the players are the buyer(s) and the seller(s).
What is the difference between oral auctions and second-price auctions?
In oral auctions, unlike sealed-bid second-price auctions, the winner never reveals his reservation price. We investigate bidders’ strategies in the two auctions when third-parties can exploit information revealed by the auction.
What is pure and mixed strategy in game theory?
However, if only one of the organization increases the prices of its products, then it would incur losses. In such a case, an increase in prices is regarded as a pure strategy for organizations ABC and XYZ. On the other hand, in a mixed strategy, players adopt different strategies to get the possible outcome.
Why do economists refer to the methodology for analyzing oligopolies as game theory?
Economists refer to their methodology for analyzing oligopolies as game theory because, as in games, firms employ strategies to attain their objectives. interactions among firms, which are players, are crucial in determining outcomes. firms are governed by rules that determine what actions are allowable.
What are the different types of game theory strategies?
Therefore on the basis of outcome, the strategies of the game theory are classified as pure and mixed strategies, dominant and dominated strategies, minimax strategy, and maximin strategy. Let us discuss these strategies in detail. 1. Pure and Mixed Strategies: In a pure strategy, players adopt a strategy that provides the best payoffs.
What is the objective of game theory in economics?
The objective of game theory is to identify the optimal strategy for each participant. An economic game represents competition between different economic agents. A game typically has three elements: players, strategies and payoffs. A player is a participant in an economic game.
What is dominated strategy in game theory?
On the other hand, a dominated strategy is the one that provides players the least payoff as compared to other strategies in a game. In the analysis of the game theory, dominated strategies are identified so that they can be eliminated from the game.
How game theory strategy improves decision making?
How Game Theory Strategy Improves Decision Making. Game theory, the study of strategic decision-making, brings together disparate disciplines such as mathematics, psychology and philosophy. Game theory was invented by John von Neumann and Oskar Morgenstern in 1944 and has come a long way since then.