On Multiplicative Bidding Strategies

Some models of competitive bidding consider only bidding strategies in which the bid is a preselected multiple of an estimate of the value (or cost) of the subject of the auction. This paper examines the effect of such a restriction on these models. In order to do so, it is necessary to show that the ratio of two positive random variables (e.g., a cost and a cost estimate) cannot be statistically independent of each of them unless the ratio is always the same.