David Thompson: Uncertainty and Learning in Auctions

We study rational bidders in auctions, but relax the standard assumption that each bidder knows precisely what she would be willing to pay. In our model, this information has an associated cost representing the bidders' computational or cognitive limits. Thus a bidder does not just decide how to bid, she first has to decide how well informed to become. Initially, we studied this problem from the perspective of the bidders, identifying Nash equilibrium strategies for classical auction designs. More recently, we considered the perspective of the auctioneer, investigating the problem of auction design for uncertain bidders.

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