Transcription of Chapter 9 Auctions - Cornell University
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Chapter 9 Auctions - Cornell University
Chapter 9 AuctionsFrom the bookNetworks, Crowds, and Markets: Reasoning about a Highly Connected David Easley and Jon Kleinberg. Cambridge University Press, preprint on-line at Chapter 8, we considered a first extended application of game-theoretic ideas, in ouranalysis of traffic flow through a network. Here we consider a second major application the behavior of buyers and sellers in an auction is a kind of economic activity that has been brought into many people severyday lives by the Internet, through sites such as eBay. But Auctions also have a longhistory that spans many different domains. For example, the government uses auctionsto sell Treasury bills and timber and oil leases; Christie s and Sotheby s use them to sell art;and Morrell & Co. and the Chicago Wine Company use them to sell will also play an important and recurring role in the book, since the simplifiedform of buyer-seller interaction they embody is closely related to more complex forms ofeconomic interaction as well.
9.3. RELATIONSHIPS BETWEEN DIFFERENT AUCTION FORMATS 253 Ascending-Bid and Second-Price Auctions. Now let’s think about an ascending-bid auction, in which bidders gradually drop out as the seller steadily raises the price.
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