SESSION A

This session introduces players to bidding by pitting each of them against a single programmed bidder. The player tries to beat the programmed bidder and then record his or her results. For each game there is a minimum number of rounds that must be played in order to record results (usually 10 rounds.) The results indicate how much money a player has made in comparison to other bidders. This creates a powerful learning effect as each player tries to move up the ranking. In this session students find out how a good bidding strategy changes as the mean and variance of the distribution changes.

Games 1-4: Valuations uniformly distributed

These four games are all variations of the DOLLAR BILL auction described in the introduction. In each case a buyer’s valuation is evenly (“uniformly”) distributed over some interval. There are two bidders. In the first game the values are distributed between zero and 100. In the second, all the values are increased by 50 so the mean is shifted up from 50 to 100 without changing the spread (or variance) of the distribution. In the third game values are on the interval [0,200] so that the mean remains 100 but the variance is greater. Game 4 is the same as game 2 except that the seller announces he will not accept any bids below 50 Since all buyers place a value of at least 50 on the item the seller cannot lose by having such a minimum price.

Game 5-8: Bell shaped distributions

The remaining games explore similar issues but this time assuming that values are approximately normally distributed.

Once a game has been played enough, the game leader may wish to show a group of players what theory predicts for each game. For this the game leader will need to contact me to obtain the password.