Research On The Bidding Strategy Of Considering The Bidders' Behavior In First-Price Sealed-Bid Auctions

As an old price discovery mechanism auction has a wide range of practical back-ground in the economic field. It can carry out the resource allocation and maximize the participants' revenue. Traditional auction is conducted on the basis of neutral assumption of the bidders, but large amounts of data show that the bidders will be overbidding or underbidding in actual auctions and experimental studies departure from the traditional conclusion. And the same time, the traditional auction bidding strategy is difficult to deal with the issues of considering the behavior of bidders' bidding strategy. Now, the research on the bidding strategy of considering the bidders' behavior in first-price sealed-bid auctions is in its infancy. Therefore, it is necessary to study the problem.After learning from the relevant literature, this paper proposes a research framework on the basis of refining the decision problem of considering the bidders' behavior in first-price sealed-bid auctions to construct the auction model and solve the bidding strategy and then, carrying out an experiment to calculate the parameters of describing the behavior of the bidders. At last this paper will give a case study. The followings are the main work of this paper.(1) Constructing the auction model and solving the bidding strategy on the basis of considering the bidders' behavior in first-price sealed-bid auctions. After learning the traditional auction model and the regret theory, this paper proposes a method to integrate the bidders' regret into the bidders'ex ante expected utility function model, and on this basis, calculating the expression of the bidders' bidding strategy.(2) Calculating the values of regret parameters. After making a detailed experimental descriptions and design, this paper implements an experiment to collect the bidding decision-making data from the subjects. Then, use the collected data to solve the values of regret parameters.(3) A case study. On the basis of theoretical analysis and experiment this paper applies the research to the auctions of SO2 emission rights to determine the best bid price for the bidders. Compared with the traditional risk-neutral Nash Equilibrium optimal bidding strategy, this paper concludes the practical significance of this study.In this paper, the methods of constructing the auction model and solving the bidding strategy on the basis of considering the bidders' behavior in first-price sealed-bid auctions and calculating the values of regret parameters lay the foundation for related research, and the case study verifies the significance of the study for the practice, It lays the foundation for iuture expansion to other auctions.