Winner's curse

In this game, twenty oil companies are bidding for a field of oil of uncertain value in a sealed bid second price auction. All oil companies make their own private assessment of the value of the oil field, and bid c*v where c is a constant, and v is their assessment of the true value of the oil field.

If you were to participate in this auction, it would be a good idea to bid the true value of the oil field, but not necessarliy to bid what you think the true value is.

Uncertainty of assessment
Assessment is exactly true
Assessment off by a maximum of $5
Assessment off by a maximum of $10
Assessment off by a maximum of $20

c




2011 Kristian Koerselman | start over | return to main page