Question

Consider an auction where n identical objects are offered, and there are {n + 1) bidders. The actual value of an object is the same for all bidders and equal for all objects, but each bidder gets only an independent estimate, subject to error, of this common value. The bidders submit sealed bids. The top n bidders get one object each, and each pays the next highest bid. What considerations will affect your bidding strategy? How?

Answer 1

The income of the bidder affects the bidding strategy as beyond a certain point, the person can't bid because of the budget constraint.

The reputation also affects the bidding strategy cause if a competitor raises more, than I will have to raise more than him to instill a sense of reputation.

The consideration that the other player is bidding a higher value for the identical product, will make me question my value and thereby will have to bid more if a player values it more.

If consecutive bidders bid by only a small amount each time, then I will bid by a much higher value in order to gain an edge and advantage, depending on the fact that the benefit is more than the costs implied.