Pumpkin Auction?
During the fall season, or more specifically during the pumpkin season, various towns have the tradition of auctioning pumpkins. Pumpkin auctions are a fun and interactive method of selling mass amounts of produce for buyers who want a set number of pumpkins. Why create an auction to bid on pumpkins? Well, pumpkins are high in nutritional value, which can be great for diets that require a lot of zinc or beta-carotene. Furthermore, pumpkins are great for decoration during Halloween or Thanksgiving. Similarly, these auctions can auction other fresh produce, but for this article, we will focus on pumpkins and how to win in a pumpkin auction.
All pumpkin auctions are run differently, with various conditions and outside factors to consider. Still, there are a few commonalities between the pumpkin auctions run in Mifflinburg, PA, Blue Ridge, VA, Chesterhill, OH, and Tampa, FL. All commonality in the pumpkin auctions in these cities or real towns is that the auction is a first price auction in which the winning bid chooses the amount of pumpkin they will receive. In short, the winning bid could pick one pumpkin or three hundred pumpkins. The buyer may or may not have an initial value for a set quantity of pumpkins. However, they know they are bidding for a specific item. Thus, the value of an object in this auction will depend on how many pumpkins the buyer wants. If a winner does not claim their item, it returns to the auction. Another aspect of this auction is that the pumpkins are always sold (or taken) at a price lower than the supermarket’s retail price. Even if the buyer overbids, the historical trend of this auction indicates that the payoff in this auction would be better than buying pumpkins in the supermarket. In this case, bidding truthfully may not be a dominant strategy because
1) if a buyer desperately wants a set number of pumpkins, then bidding truthfully hurts their chances of getting the pumpkins they desire.
2) if a buyer does not have a set number of pumpkins, then bidding truthfully will hurt their opportunity of being able to choose the number of pumpkins they could want.
If anything, buyers are not only bidding for pumpkins but the opportunity to select and buy a specific number of pumpkins. In conclusion, a buyer’s best strategy in a first-price pumpkin auction would be to bid their highest possible value.
Realistically there are a variety of conditions and outside factors to consider during a first-price pumpkin auction. For the sake of simplicity, let’s assume a buyer has a set number of pumpkins they want and a set value for bidding on that number of pumpkins. If the auction has an admission fee of $5 per adult, then the admission fee should lower the buyer’s value for their item. Assuming that only adults are allowed to bid, all buyers will have to reconsider their bid with respect to the admission fee. Another condition to consider is the event in which only one pumpkin is sold. For example, in an auction in Tampa, Florida, there was only a pumpkin auction for a pumpkin that 969 pounds. The bids in a first-price auction for one pumpkin will be similar to the first-price auctions learned in INFO 2040. Thus, a possible condition to consider is when an auction has one item versus multiple items sold. However, regardless of the number of items being auctioned, the dominant strategy for a first-price auction still applies to a first-price pumpkin auction.
In conclusion, we can form a generalized dominant strategy for a first-price pumpkin auction. The dominant strategy is to refrain from bidding truthfully because buyers are not only bidding their value for the item but also the opportunity to buy the number of items they desire. The generalized dominate strategy can be applied to different conditions and factors only when the buyers’ bids reflect those conditions and factors that influence the setup of the auction.
Work Cited:
https://www.lancasterfarming.com/farming-news/produce-auctions-pumped-for-pumpkin-season/article_9d38a435-48ca-5e2b-8588-6dbec45acbc5.html
https://salemva.gov/News/ArtMID/519/ArticleID/2689/Pumpkinfest
https://www.healthline.com/nutrition/pumpkin-nutrition-review#health-benefits