Economics 7 Week Challenge 2022 – Challenge 1: Auction

Hi Everyone,

Welcome to the Economics 7 Week Challenge Series for 2022. Over 7 weeks, in the months of August and September, I will be running an economics challenge series. This series will consist of 7 challenges. Five of these challenges will be returning from last year’s Challenge Series and two of them are completely new. Below are the list of challenges.

Challenge 1: Auction
Challenge 2: Buying and Selling Game (Business Version)
Challenge 3: Tax Game (New)
Challenge 4: Game Theory
Challenge 5: Make Me Happy
Challenge 6: Buying and Selling Game (Original Version)
Challenge 7: Pick-a-door (New)

Each challenge could reward winners with as much as 60 Hive. The value of the prize will depend on the level of participation. For each new participant, the prize will increase by 5 Hive. This will continue until 60 Hive is reached (12 participants). The first 12 participants will also receive a 50% upvote from this account. In addition to the prize money, the top few participants will be given points. These points will be used to determine the overall challenge series winner. This winner may receive as much as 80 Hive. The value of the prize will equal the sum of the number of participants across all challenges. This will continue until 80 Hive is reached.

For more information on the challenge series and the upcoming challenges, I recommend that you read my post Spectrumecons Seven-Week Challenge 2022 (Coming Soon) and watch my video.

Welcome to Challenge 1: Auction

How to Play?

Auctions can be fun. They can be an opportunity to pick up a bargain or a unique item not available anywhere else. Auctions can be fun because of the element of competition and the feeling of outbidding other people. It is like winning a game. However, our bidders have to becareful not to bid more than what the item is worth to them.

For the auction in this challenge, participants will be bidding on items that only have limited information available regarding their value. The participant who bids the highest wins the item (i.e. the value of the item). The challenge will reveal the range of values for each item. The actual values will be revealed in the results post.

All entries must be made in the comments section of this post.

Each account is only permitted one entry.

Objectives of the game

Participants should aim to win rounds in the auction while bidding below the value of the item. Therefore, making a profit on each item. The participant who makes the highest overall profit (sum of value of items won minus the value of winning bids) wins the challenge.

Game Assumptions

The value of each item is the same for every participant. E.g., one participant will not value an item 3 times higher than another participant based on his or her own personal preferences. Imagine participants are acquiring these items for resale rather than personal use.
Each participant has an unlimited amount of money.
Each participant can only bid on a maximum of 4 items.

What information is provided?

All items are provided but they are named as Items 1, 2, 3, etc.
Exact values for each item are not provided. Instead, maximum and minimum values are provided. A model will be used to determine these values using a uniform distribution.

How are the results of the game determined?

A Microsoft Excel Model is used to determine the exact value of each item. The results post will contain a video of the generation of the values. The winner will be announced in both the video and written post.

Contest Prizes

The account with the winning entry may receive up to 60 Hive. The number of participants determines the value of the prize. For every entry, the prize is increased by 5 Hive until a value of 60 Hive is reached. The first 12 entries will be given upvotes. The winner of this challenge will be given 30 points, second place 15 points, and third place 5 points. These points will be tallied at the end of the challenge series to determine the overall winner.

Let the challenge begin

Participants can bid on only up to 4 of the 12 items at the auction, choose wisely. These 12 items are as follows:

Auction Items

The exact values of these items are unknown to the bidders. Instead, the bidders have information regarding the minimum and maximum values for these items. Table 1 contains the minimum and maximum values for these items.

Table 1: Minimum and Maximum values of items

Entry format

For this challenge, I expect to see entries made in the following format:

Item:
Bid:

Example of entry

Item: 2
Bid: 280

Item: 7
Bid: 220

Item: 10
Bid: 150

Item: 12
Bid: 80

The closing date and time for this challenge is 6PM coordinated universal time (UTC) 18/08/2022. Responses after this time will not be accepted. The winners will be announced in the results post along with the video containing the generation of values for each item.

I hope everyone has fun and enjoys the first challenge. I look forward to your participation in the second challenge.

If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These 'Collection of Works' posts have been updated to contain links to the Hive versions of my posts.