StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Optimal Bidding Strategies - Essay Example

Comments (0) Cite this document
Summary
Running head: Optimal Bidding Strategies Optimal Bidding Strategies Insert Name Insert Grade Course Insert 28 February 2012 Optimal Bidding Strategies Introduction Optimal bidding strategy is the best decision making criteria used by bidders to maximize their chances of winning and the profitability of winning bids…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.3% of users find it useful
Optimal Bidding Strategies
Read Text Preview

Extract of sample "Optimal Bidding Strategies"

Download file to see previous pages Game theoretical issues in bidding often form the basis of well defined mathematical models used by bidders in arriving at optimal bidding strategies. Bidders often have varying preferences and capabilities, and thus, one bidder’s strategy may directly impact on another bidder’s strategy, although on the basis of private and independent valuations to the bid. The overall market efficiency may also be influential to the impact and effectiveness of optimization strategies that bidders put in place (Eckbo, 2010, P.55-78). First Price Sealed Bid Sealed bids are often rendered as the seller’s monopoly since information regarding the winning bids and their valuations are open to the seller and hidden to buyers as opposed to open forms where information is available to all participants. First price sealed bid auction is basically a bid where each participating bidder submits a sealed bid hidden from other bidding participants to the auctioneer. The first price sealed bid is rather referred as a one shot game since bidders winning chances relies on their one time decision and valuation after which the bid manager opens the bids and determines the highest bid as the winning bid. Bidders with the winning market clearing bids must then pay the amounts they set forward as a one shot bid (McGuigan, Moyer, & Harris, 2011, p.594). The first-price sealed bid auction optimal bidding strategy basically lies on submitting bids below one’s private valuation to maximize surplus. Maximization of a bidders expected surplus is dictated by lower a bid that increases surplus potential although on the other hand it reduces probability a bid becoming successful. More so, the probability of a bid becoming successful increases with valuation increase but decreases with an increase in the number of bidders with regards to their strategies and valuations. The basic optimal strategy for the first-price sealed bid auction is for a bidder to bid below the real valuation in order to make a profit. In case the bidder bids above or equal to the bid valuation, the payment may exceed or equal the bid valuation in case of a win bid, and thus, no optimization is achieved (Sheble. 1999. P.44-151). There are no interactions among bidders in the first price sealed bid auction, since bids are only submitted by participants once. Participants trade between winning more frequently and maximizing profits, and low bidding with regards to the Nash equilibrium. Optimal bidding strategies under independent and uniformly distributed private valuations among bidders calls for a slight overestimation strategy of the winning bid, considering the fact a bidder has the chance of winning when he or she has the highest estimate irrespective of correct bidding based on averages (Kagel & Levin, 2002, p.2). Assumption that all participating bidders are risk-neutral renders the optimal bidding strategies in the first price sealed bid auction as a bidder that emerges the highest bidder among all bidders bidding the highest expected value (Sheble, 1999, p.70). The optimal difference between the value that a bidder opts to bid below private valuation and the actual value basically depends on beliefs of the bidder with regards to rival bidder valuation and strategies. This strikes situational ...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Optimal Bidding Strategies Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
Optimal Bidding Strategies Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from https://studentshare.org/macro-microeconomics/1443896-assuming-independent-and-uniformly-distributed
(Optimal Bidding Strategies Essay Example | Topics and Well Written Essays - 1500 Words)
Optimal Bidding Strategies Essay Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/macro-microeconomics/1443896-assuming-independent-and-uniformly-distributed.
“Optimal Bidding Strategies Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/macro-microeconomics/1443896-assuming-independent-and-uniformly-distributed.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Optimal Bidding Strategies

Marketing Communictions Strategies of the Col Drinks in the UK

Unfortunаtely for smаll soft drink compаnies such аs the Double- Colа Co., the prize of less thаn one percent mаrket shаre is won only by fighting а dаily bаttle for survivаl, especiаlly аgаinst industry giаnts Cocа- Colа аnd Pepsi- Colа.

The following investigаtion is а cаse study of the successes аnd fаilures of one smаll compаny in the soft drink wаrs. It is а testаment to the meаning of brаnds аnd the lengths thаt loyаl consumers go to keep Double- Colа аs their fаvorite beverаge. Аnd it is аn evаluаtion of how аdequаtely the current regulаtory environment serves the needs of these consumers аs well аs Double-Colаs owners аnd bottlers. It аddresses criticisms thаt the regulаtory environment permits аn uneven plаying...
19 Pages (4750 words) Case Study

Operations Strategies for Gaining Competitive Advantage

The whole corporation strategy is based on the principle of direct contact with customers. This contact is achieved by selling computer systems directly to the customers (direct business model). As of its performance objectives, the company is been focused on the retention of its current position in the market (Daroca et al, 1996) with a prospect of an extension of its area of influence through the application of direct business model (as analyzed above) as well as its entrance to new, standardized product categories, such as network servers, workstations, mobility products, printers and other electronic accessories [1]. Another characteristic of a corporation’s strategic options (regarding the performance objectives set whe...
10 Pages (2500 words) Assignment

The Causes of Plagiarism and Strategies to Prevent It in a University Environment

There is another aspect of practicing plagiarism, which has been discussed by Edward M. White. He has seen the problem of plagiarism from a different angle in his “opinion” article in Chronicle of Higher Education, “Student Plagiarism as an Institutional and Social Issue”. He has raised the issue of “Research Assistance” provided by advertisers, “Thousand of papers in stock, available for any course”, pointing to the problem of not only graded students papers going out of the office for resurfacing in future but the immoral practice of taking outside sources help to complete the assignments, which, according to the writer, needs to be fixed. This trend of plagiarism has degraded lear...
12 Pages (3000 words) Report

Marketing Strategies in the Changing Envrionment of the Hospiltality and Tourism Industry

There is oversupply and new products are being introduced in the hospitality market like corporate housing and timeshare in the United States market. Keeping in view the new business environment, the hotel companies are experimenting by finding new sources that offer competitive advantage (CA) to enhance companies' performance. According to Barney (1991), recognizing the sources of CA is getting increasing attention in the line of strategic management. Likewise, the demand of able managers, who could encash the opportunities arising out of the assessment of market forces, create new resources, apply reliable strategies and give good results, has increased in the hospitality industry.

Theoretically, sources of CA can be...
7 Pages (1750 words) Term Paper

Optimal Capital Structure

One of the recent concepts applied in financial management is the effective utilization of resources and choosing the optimal and most appropriate capital structure. In a resource constraint situation, the importance of financial management is especially highlighted as financial strategies are required to get the company or organization pass through several constraints that it may confront in the day to day functioning. The reasons leading to these sources constraint situations could be lack of demand, scarcity of raw materials, labor problems, liquidity control, lack of technological awareness, prejudiced policies about management and finance, etc. If the problem is not taken into consideration during the initial stage itself, th...
6 Pages (1500 words) Coursework

The Major Issues in the Debate Regarding the Existence of an Optimal Capital Structure

The level of capital has been used as a criterion for the classification of a company within its market. Regarding this issue it is noticed by Penrose (1952, 810 in Cooper, 1997, 750) that ‘positive profits can be treated as the criterion of natural selection -- the firms that make profits are selected or 'adopted' by the environment, others are rejected and disappear’On the other hand, Ruhnka (1985, 45) supported that ‘the primary source of capital for most start-up and development stage companies is equity capital raised through limited stock offerings that are exempt from expensive federal and state registration requirements’. In other words, the capital of the firm can be formulated through a series of...
13 Pages (3250 words) Term Paper

Evaluation of the Course: Teaching and Learning Strategies

I will begin my evaluation with the objectives of the course, discuss a theory that is relevant to learning styles to see how it fits with the course and then provide my conclusions about how this course meets the objectives of the course.

 I am assuming that the Teaching and Learning Strategies class was created for students at the college level who were going into some form of teaching or training.

To evaluate this course it is a good idea to start from the beginning and look at the objectives. As I was looking for references in this process, I found a website that had tips for designing instruction that I felt would offer me a structure to work within. According to "Instructional Design," the instruct...
7 Pages (1750 words) Term Paper

Marketing Strategies of Apple i-Phone

‘Apple Inc’ is an American multinational corporation designing and manufacturing consumer electronics including computers, notebooks mobile phones, and software products. The company’s best-known hardware products include the iPhone, iPod and very recently launched 3G Apple iPhone.

iPhone became one of the most discussed new technology products, surpassing the wider coverage of other very well-known mobile phones that have been playing the best roles in the market. When Apple CEO Steve Jobs stood on the stage at the Macworld Expo in San Francisco and announced “We’re going to make some history together; Today Apple is going to reinvent the phone” (Jobs 2007), it could really influence...
8 Pages (2000 words) Case Study

Epidemiology of Avian Influenza, and Pandemic Preparedness Strategies

The Asian Flu claimed 70,000 people’s lives in 1957. The Hong Kong Flu in 1968 killed 34, 000 people (Howard, 2007). These previous occurrences have made world and community leaders as well as the public fearful of a threat of a pandemic. The Avian flu virus is a type A influenza virus. Type A influenza viruses can be found in humans, birds, and other mammals. It is the only type of influenza virus that has caused pandemics as evidenced by history (Beigel, 2008).

Only four known strains of avian influenza viruses have been found to affect humans among them H5N1, H7N3, H7N7, and H9N2. Among the four, H5N1 is the most highly pathogenic. It is the greatest source of alarm due to two primary reasons. The first reason...
7 Pages (1750 words) Report

Crime Strategies Unit

A’s office has always been that through fair and just administration enhancement of public safety can be achieved. Established on the philosophy that “A prosecutor’s office is to ensure justice and safety” It is from this that the Crime Strategies Unit (CSU) was created by D. A Vance in 2010 so as to target priority offenders and address crime issues by utilizing the collective resources of the D. A’s office, thus, developing and being able to implement strategies in an intelligence-driven prosecution (Manhattanda.org 2014).
The goal of the Crime Strategies Unit is to be able to foresee a crime before it happens and prevent it rather than after an arrest where D. A’s office prosecutes cases...
7 Pages (1750 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Optimal Bidding Strategies for FREE!

Contact Us