Accession Number : AD0629520

Title :   COHERENT BIDDING STRATEGIES AND COMPETITIVE BEHAVIOR,

Corporate Author : WESTERN MANAGEMENT SCIENCE INST UNIV OF CALIFORNIA LOS ANGELES

Personal Author(s) : Woods,Donald H.

Report Date : JAN 1966

Pagination or Media Count : 30

Abstract : A competitive sealed bidding decision game is modeled after an asymmetrically uncertain actual situation. One player knows an asset value for certain, but the other has only a probability distribution on which to act. In addition, both are uncertain regarding each other's bidding strategy. The theory of noncooperative two-person nonzero sum games, although useful in providing a structure for the problem, is not helpful because one player's bidding strategy is dependent on the true asset value whereas the other's is not. On the other hand, Bayesian decision theory provides a systematic framework for synthesizing a coherent bidding strategy even when the opponent does not play his 'equilibrium strategy.' A strategy is termed coherent when the three elements of uncertain asset value uncertain competitive behavior, and one's own bid are in balance. The subjects are a group of businessmen attending a seminar. Through the use of assessed subjective probabilities, each player's actual judgments regarding competitive behavior are taken into account. The bids are found to be largely incoherent and exploitable, although improvement is noted after switching of roles. (Author)

Descriptors :   (*GAME THEORY, DECISION MAKING), (*DECISION MAKING, GAME THEORY), PROBABILITY, DECISION THEORY

Subject Categories : Psychology
      Operations Research

Distribution Statement : APPROVED FOR PUBLIC RELEASE