Asked • 04/25/19

In auction theory, why is my own valuation a random variable?

Auction theory typically (always?) begins by assuming that each bidder's valuation is a random variable. Now, it might seem reasonable (at least from a Bayesian perspective) for you to treat **other** people's valuations as random variables. After all, you don't know their valuations! However, what justification can there be for treating your **own** valuation as a random variable when deciding on how to bid? And are there any approaches which do not begin with this assumption?**Edit:** Here's another way of posing the question. In the context of auction theory, people normally seem to define a strategy as a **function** mapping from my (random) valuation to my bid. But assuming that I know my valuation, why not simply define my strategy as my bid?

1 Expert Answer


Still looking for help? Get the right answer, fast.

Ask a question for free

Get a free answer to a quick problem.
Most questions answered within 4 hours.


Find an Online Tutor Now

Choose an expert and meet online. No packages or subscriptions, pay only for the time you need.