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===Dutch Auction===

===Dutch Auction===

A dutch auction is similar to an English auction, but in this case, bidding starts at a very high price.  The auctioneer lowers the price of the item, until someone is willing to purchase it.  The term was popularized by auctions held by the Dutch for their tulips, which led to [[tulip mania]], and eventually, the near-collapse of the Dutch economy.

A Dutch auction is similar to an English auction, but in this case, bidding starts at a very high price.  The auctioneer lowers the price of the item, until someone is willing to purchase it.  The term was popularized by auctions held by the Dutch for their tulips, which led to [[tulip mania]], and eventually, the near-collapse of the Dutch economy.

===Sealed bid first-price auction===

===Sealed bid first-price auction===

==Auctions & Game Theory==

==Auctions & Game Theory==

An example using game theory is listed below.  In this case, if both players bid the same amount, then the payout in parentheses is assumed to be half of the value, as they are equally likely to win the auction (usually through some means of a tie-breaker).  The values in parantheses are (Bidder #1 bid - Bidder #1 true value, Bidder #2 bid - Bidder #2 true value).  If one player bids higher than the other, the other bidder gets 0 (they don't get the item and don't spend any money).  The [[Nash equilibrium]]s are marked with an asterisk:

An example using game theory is listed below.  In this case, if both players bid the same amount, then the payout in parentheses is assumed to be half of the value, as they are equally likely to win the auction (usually through some means of a tie-breaker).  The values in parentheses are (Bidder #1 bid - Bidder #1 true value, Bidder #2 bid - Bidder #2 true value).  If one player bids higher than the other, the other bidder gets 0 (they don't get the item and don't spend any money).  The [[Nash equilibrium]]s are marked with an asterisk:

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