4 ms·
I'm not an expert in game theory (I just had a half-completed econ degree once upon a time) but your analysis is spot on as far as I can tell. The pareto effici
by shaddi 16y ago
I'm not an expert in game theory (I just had a half-completed econ degree once upon a time) but your analysis is spot on as far as I can tell. The pareto efficient outcome is for the first agent to bid $1 and for the second agent to quit without bidding. If there is a counter bid, then the first player will have an incentive to bid higher to avoid a loss. The second player would then have to counter bid in order to avoid a loss as well, and so on. At the $20 mark nothing changes: at that point both players are now trying to minimize loss. In any case, any other alternative from the pareto efficient $1 vs $0 bid will cause at least one agent to have a less preferable outcome, and hence that strategy would be chosen by a "logical" player.
Maybe more interesting would be to have each agent pick a bid in advance and reveal the bids simultaneously. Of course, the optimal strategy there would be to just bid as close to $20 as possible and hope for winnings to accumulate over time.
And in all of this it's not clear how the proprietor of this site will make money out of this deal.
Feel free to correct me if someone thinks this is wrong: perhaps there is a reason I never finished that degree. :)
- F50V12 16y agoUsers have a real shot at winning 20 dollar bills for less than face value. The reason for this is whenever a user cannot be paired up with another, he/she is paired up with a bot that chooses a max bid in advance and at random from a specified range. Once the auction hits this max bid, the system will quit and the user wins. The expectancy is in favor of the site, of course, but only marginally so.
- GraffitiTim 16y agoSo, like a casino? Is that even legal?
- F50V12 16y agoSimilar to a casino in that there is an element of chance that plays into the results. But dissimilar in that we're looking to build this into a fast-paced auction site for different items.
- ac132 16y agoHow can a user trust your bot? So essentially, the only way to win at this game is for it to no longer be human-to-human interaction? What exactly are you studying? Human willingness to gamble their money away based on the potential that the thing on the other end is really a stupid bot?
- F50V12 16y agoAs you might imagine, I cannot control the results of user v. user auctions. But in an effort for users to trust my system's bot, I am prepared to post actual results of the last n real user v. bot auctions.
- a-priori 16y agoStrange game. The only winning move is not to play.
- akkartik 16y agoA strange game :) (http://www.imdb.com/title/tt0086567/quotes#qt0453844 http://www.imdb.com/title/tt0086567/quotes#qt0453844)
- a-priori 16y agoI stand corrected :)
- SkyMarshal 16y agoHow about a nice game of chess?
- krauses 16y agoSo when does the bidding end? There would be no reason to ever stop bidding. To avoid losing your money, all you have to do is make another bid. Your opponent will probably realize that if he doesn't out bid you again, he's going to lose a lot of money. So he out bids you. Which really pisses you off, until you realize that you can avoid losing your money again if you just make another bid. The game goes back and forth until one of you dies of an overdose. Then the game ends by default, but the winner will have a tough time collecting his money from his dead opponent.
- shaddi 16y agoThe logical player wouldn't start bidding, unless they bid first. The illogical player presumably would stop bidding when they get tired (or have changed their billing information so that they can't get charged for their bids!).