Advanced Micro · intro
What moves on the Auction Theory diagram
A higher private value moves you along the same equilibriumequilibriumThe point where opposing forces balance, quantity supplied equals quantity demanded, so there's no pressure for price to change. bid function: bid more, but keep the same proportional shading against the same rivals.
Your optimal bid is read off the bid function at your private value.
You discover the item suits you better than you thought: your value rises.
The value marker slides right and your optimal bid rises with it, still shaded below the new value.
Note what did NOT change: the shading fraction. How much you want it changes your bid, not your strategy.
Examiners ask this as: higher valuation, want it more, dream house auction, must have item.
Other scenarios on Auction Theory