Optimal Bidding Strategies In Non-sealed Bid First-price Auctions Of Common Products With Quantity Uncertainty

We consider Non-sealed Bid First-price Auctions of Common Products with Quantity Uncertainty. In these auctions, all bidders have the same valuation of the products but may have different demand quantities. The number of units being auctioned can be random with a known and common distribution. Each bidder decides on a bidding price to maximize her profit. We derive Nash equilibrium solutions, i.e., bidders' optimal bidding strategies.In a non-sealed bid first-price auction under fixed FIFO tie-breaking rule, where the tie-breaking priority is based on the bid submission time, the auction might close at a very high price since later bidders are discouraged from participating in the auction. For the non-sealed bid first-price auction with FIFO tie-breaking, it is a game of speed where very bidder bids, as fast as possible, atδ+c and the auction closes atδ+c. The random tie-breaking rule should not be used in a non-sealed bid first-price auction because the equilibrium bid price can be much higher thanδ+c.In Summary, this paper provides some theoretical and practical foundation for the implement and design of online auction rules and Optimal Bidding Strategies to online auctions.