Accession Number:

ADA331673

Title:

Bidding for Contract Games Applying Game Theory to Analyze First Price Sealed Bid Auctions

Descriptive Note:

Master's thesis

Corporate Author:

NAVAL POSTGRADUATE SCHOOL MONTEREY CA

Personal Author(s):

• Kucama, Andras I.

Report Date:

1997-06-01

Pagination or Media Count:

121.0

Abstract:

This study analyzed the first price sealed bid auction FPSBA using computer simulations. The first price sealed bid auction is a static Bayesian game with incomplete information. These games have a well defined symmetric Bayesian Nash equilibrium. The existence of the equilibrium makes it possible to find the bidders equilibrium strategies. The equilibrium strategy maximizes the bidders profit. This thesis assumes, 1 the bidders act rationally and have private information about their production cost, 2 the bidders preferences and information are symmetric, 3 the buyer is committed not to deviate from the auction rules, even if a deviation would be profitable. Considering these assumptions and the equilibrium strategy, this Thesis constructed a FPSBA model. The model was transformed into an algorithm and coded in Visual Basic language. The code was used to simulate the FPSBA in different scenarios. The simulation showed the bidders behavior and identified factors affecting the bidders decision during bid preparation. Critical factors include the cost distribution and number of bidders. The concluding chapter presents the analytical results.

Descriptors:

• *COMPUTERIZED SIMULATION
• *BAYES THEOREM
• *GAME THEORY
• ALGORITHMS
• PERFORMANCE(HUMAN)
• RANDOM VARIABLES
• STATISTICAL DATA
• THESES
• PROBABILITY DENSITY FUNCTIONS
• DECISION THEORY
• ORDER STATISTICS
• STATISTICAL PROCESSES
• JUDGEMENT(PSYCHOLOGY)
• PERCEPTION(PSYCHOLOGY)

Subject Categories:

• Statistics and Probability
• Operations Research

Distribution Statement:

APPROVED FOR PUBLIC RELEASE