Research On The Sealed-bid Auction Considering Limited Rational Behaviors

As an ancient commodity distribution mechanism,auction has become an indispensable part of economic activities.The research of auction theory plays an important role in guiding the economic practice,which has inspired more and more scholars to explore it and achieved abundant results.The traditional auction model usually assumes that the bidder is completely rational,but the actual human behavior is often limited rational,which leads to the actual auction is inconsistent with the expectation of the traditional auction theory.Therefore,in order to better predict the behavior of bidders in the actual auction,it is necessary to consider the psychological behavior of bidders,and introduce targeted behavioral decision-making method to study the auction theory.First,in the view of the possible phenomenon of Overbidding in an auction,Two kinds of sealed-auction models considering star-shaped probability weights are constructed,explains the phenomenon of overbidding in the first-price sealed-auction,and points out that in the second-price sealed-auction,the bidders' dominant strategy is still to quote their own valuation,so the income of the two kinds of auctions are not equivalent.Then,this paper divides the auction process into two stages,valuation and quotation,aiming to consider the psychological behavior of bidders in both stages.For the valuation stage,the influence of historical auction records on the formation and updating of reference points is discussed,the regret theory is used to analyze the reference dependence effect,and the valuation function of bidders is obtained.Furthermore,considering the psychological behavior in the bidding stage,the star-shaped probability weight function is used to describe the risk aversion psychology of the bidder,and the bidder's equilibrium bidding strategy and the expected return of auction are derived.Finally,the influence of reference points and value parameters on auction results is discussed,and the auction problem is simulated by MATLAB.By analyzing the simulation figures,the phenomenon of overbidding and underbidding in the auction is explained,and it is pointed out that when the bidder's expectation of the good is too high,the auction good may fail to be sold.