4 ms·
> You should put in a bid where you're exactly neutral between buying-vs-not-buying. Otherwise, you're leaving money on the table. This is asking people to make
by SamBam 7y ago
> You should put in a bid where you're exactly neutral between buying-vs-not-buying. Otherwise, you're leaving money on the table. This is asking people to make purchasing decisions whose outcomes will leave them explicitly not happy - a state of mind that every person hates putting themselves in.
It seems that this is a problem the Vickrey auction solves. By charging the price offered by the 11th highest bidder, they are ensuring that everyone pays less than or equal to their bid, and most likely less than.
This works out perfectly if everyone actually bids their neutral point: the winners are all either neutral or happy (most likely happy), the 11th is neutral, and the losers are all neutral or happy (most likely happy).
In practice, people bid at a price that they'd be happy to get it, so actually the 11th will feel slightly miffed that they weren't able to purchase at that price. And of course all the losers will be annoyed that it cost so much. But the former problem can't really be helped, and the latter is baked into basic supply-demand.
- izietto 7y ago> so actually the 11th will feel slightly miffed that they weren't able to purchase at that price. Why not including the 11th in the winners? That would solve the "unhappiness" of the 11th bidder; am I missing something?
- benchaney 7y agoIt reintroduces the incentive to cheat in some situations. It also completely falls apart when there can only be one winner, which is a significant portion of the time.
- SamBam 7y agoThere are only ten widgets for sale. So it's not really "why not include the 11th in the winner," it's "why charge the 11th bid and not the 10th?" I think the reason is that everyone feels like they have a good chance of it going for less than they bid (and so they feel happy), but it probably also incentives higher bids.