Lecture Managerial economics (8e): Chapter 17 - Samuelson, Marks

Chapter 17 - Linear programming. The final chapter considers decisions involving economic constraints. Chapter 17 takes up linear programming, a method for determining optimal decisions in the presence of specific resource constraints.

Managerial Economics, 8e William F. Samuelson   Stephen G. Marks ●

Chapter SEVENTeen

Auctions and Competitive  Bidding

Two rules for succeeding in 

business: (1) Never  underestimate the importance 

of money, and (2) everything 

is up for bid.

~Anonymous

Bidding to Televise the Olympics

Years before each Olympic Games, a competition takes  place that is just as intense as the Olympiad itself—

namely, the high­stakes bidding competition by the U.S.  networks to televise the games. 

1.3

The Advantages of Auctions

A Stock Repurchase

Bidding versus Bargaining

Auctioning Google’s Online Ads

Bidder Strategies

English and Dutch Auctions

Sealed­Bid Auctions

Strategy Against a Bid Distribution

Equilibrium Bidding Strategies

Common Values and the Winner’s Curse

Figure 17.1 

Probability distribution of the Best  Competing Bid

The Winner’s Curse

1.3

Optimal Auctions

Expected Auction Revenue

A Uniform Example

Reserve Prices

Business Behavior—

Real­Life Bidding

Expected Prices when buyer values are  uniformly distributed

Optimal Auctions

Competitive Procurement

Bidding to Televise the Olympics Revisited