Theoretical approaches to lowest unique bid auctions

Miguel Costa-Gomes, Makoto Shimoji

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)

    Abstract

    In this paper, we analyze a game called the lowest unique bid auction (LUBA). It is known that there is no closed form solution for the symmetric mixed strategy equilibria in LUBA. We propose two alternative approaches. We use weak dominance to identify upper bounds for players’ bids. Under symmetry, we provide a method to compute a mixed strategy equilibrium by utilizing the recursive structure of the winning chances of the bids under one assumption.
    Original languageEnglish
    Pages (from-to)16-24
    Number of pages9
    JournalJournal of Mathematical Economics
    Volume52
    Early online date18 Mar 2014
    DOIs
    Publication statusPublished - May 2014

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