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On bidding for a fixed number of items in a sequence of auctions |
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| Authors: | Michael N Katehakis Kartikeya S Puranam |
| Institution: | 1. Department of Management Science and Information Systems, Rutgers Business School, Newark and New Brunswick, 180 University Avenue, Newark, NJ 07102-1895, USA;2. Department of Management, Park Center for Business and Sustainable Enterprise, Ithaca College, 953 Danby Rd., Ithaca, NY 14850, USA |
| Abstract: | We consider the problem of a firm (“the buyer”) that must acquire a fixed number (L) of items. The buyer can acquire these items either at a fixed buy-it-now price in the open market or by participating in a sequence of N > L auctions. The objective of the buyer is to minimize his expected total cost for acquiring all L items. We model this problem as a Markov Decision Process and establish monotonicity properties for the optimal value function and the optimal bidding strategies. |
| Keywords: | Stochastic processes Dynamic programming Markov Decision Processes Auctions/bidding |
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