Game theory > Auctions

An evil bidding war
A few readers pointed me to an amusing and devious bidding war featured on the site Gizmodo. You can see the full-sized picture by clicking on the thumbnail image I've posted: The postings suggest an interesting story. Someone has lost her iPod touch and is offering $50 as a reward. And someone ...

How to avoid the winner’s curse using game theory
I've made a huge mistake--GOB and others from Arrested Development Strangely, in many auctions it is a huge mistake to win. Winning can either be unprofitable or less profitable than expected, kind of like a Pyrrhic victory. The tendency of the winner to overpay is more commonly known as the winner's ...

Game theory in the news–the financial crisis, Macs and viruses, the bus-wait formula, and more…
[Update: Welcome readers from Simoleon Sense] I'm on vacation through the end of the year so I'm mixing things up. I've been seeing a lot of good articles on the web about game theory and want to share them with you. Enjoy and happy holidays. (If you're looking for more to read, ...

Understanding the winner’s curse
Sometimes winning comes at too high a cost. In such cases, it is the winners that are the real losers. The phenomenon is known as the "winner's curse" and it affects a wide variety of situations, from baseball free agency signings to stock market IPOs. Whether you are an executive in ...

Business Drinking and the Dollar Auction Game
Business drinking provides a fun subject for strategic thinking. My friend told me about a telling experience on a business trip. He had visited a bar after a long day only to find members from a competitor company show up as well. The competition greeted him politely and offered to ...

Want to Help A Beauty Pageant Winner Run a Charity Date Auction?
This is certainly one for the law of unintended consequences. I mentioned the idea of auctioning myself for a charity in my article on revenue equivalence to make the narration interesting. Well, lo and behold, this article has turned out to be interesting in a completely different way. The article is ...

Why eBay and Craigslist are Similar in Theory: the Revenue Equivalence Theorem
I can be bought. How can I get a high selling price? Imagine for a moment that I was for sale. Let’s say I was selling myself as a date to raise money for charity. There are many factors I might consider to increase my selling price. How I describe myself is ...

What is Auction Theory?
Auctions are Everywhere Auctions are so common nowadays that I bet most of you have participated in auctions in the last year. Even if you haven’t, auctions have probably impacted your life indirectly. The cost of the road you drive on, the price of your airline ticket, and where your medical ...

What do You Want to Know about Auctions?
In the internet age, auctions are everywhere. Auctions are used in eBay, Craig’s list, Google Adwords, dating websites, and job websites—just to name a few. Auction theory can help you navigate the uncertainty. You can improve your position as an informed buyer or seller. I’ve used the auction theory to buy ...