Nash Equilibria in a Sealed Bid Auction

Published Online:https://doi.org/10.1287/mnsc.22.4.487

The sealed bid auction with two bidders is regarded as a two-person variable sum game. Under perfect information a class of one-parameter distributions emerges as being “best” strategies for either bidder. Under imperfect information, approximations to these strategies lead to Nash equilibrium strategies for both players which are relatively insensitive to unilateral deviation by either of the bidders.

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