Robust Bidding in First-Price Auctions: How to Bid Without Knowing What Others Are Doing

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. This paper was accepted by Omar Besbes, revenue management and market analytics. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4899 .

• Publication year

  2023

• Venue

  Management Sciences

• Publication date

  2023-08-23

• Fields of study

  Computer Science, Economics

• Identifiers
  DOI 10.2139/SSRN.3044438
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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