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Are there other real-life applications of the Dutch Auction process?
As far as I know, Parrondo's Paradox is actually pretty boring. Let's say you have two activities. work, which you do at the office, and leisure, which you do at the park. Let's say you can only do work or leisure if your friends are at the venue in question. And your crippling social anxiety means that your disutility from loneliness is many times greater than your utility from work or leisure. Two bad strategies would be. Go to the park every day Go to the office every day But what if you alternate these two losing strategies, switching to the "Office" strategy every Monday and the "Park" strategy every Saturday? Presto, Parrondo! You've found a way to alternate two losing strategies in order to create a single winning strategy. This also seems to work with, e.g, a strategy of only exhaling or only inhaling. Alternate between them every couple seconds, and you have a viable strategy called breathing. The mathematical illustrations of Parrondo's Paradox usually involve games where one payout is based on the player's capital. To construct the kind of Parrondo's Paradox that won't irritate mathematicians, you need two payoff functions like. You are a cab driver in a city with nice neighborhoods and rough neighborhoods. In nice neighborhoods, there's lots of competition, so it's hard to get a fare. In rough neighborhoods, it's easy to get a fare, but you can get mugged. Muggers will take half of whatever money you have. Your bank requires you to have at least $20 to make a deposit, and you get $10 per fare. Your strategies are. 1. Find a fare in a nice neighorhood. 2. Find a fare in a rough neighborhood, at the risk of getting robbed. If you just do #1, you can take a long time. If you just do #2, your return may go like this. $10, $5, $15, $7.50, $17.50 ... But if you do #2, then drive like hell and switch to #1, then bank your money and do #2, you may have the optimal strategy. (Like all cabbies, you do not know fear, and laugh in the face of death.) This example is somewhat close to a possible real-world example, where the less money you have, the more risky strategies pay off. It might work for games where reputation is at stake, too. But Parrondo's Paradox requires such an elaborate, weird setup that it's hard to find real examples.
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What value I could lose is really dependent on many factors (see Appendix), but the simple rule is that the number of people bidding below what I AM willing to lose for a better deal is proportional to how much I would have to lose for them to pass on my object. This is how it works in many real auctions. In reality, I would have to offer a lot lower, since I have to take into account all potential bid values. It might work in practice for a limited set of objects, but for many objects I would want to make this assumption. And the auction would have to be pretty small in order for that to work. (As an aside, the “worst” objects in an auction where only one bidder is active could be auctioned to many people, so I think a realistic auction size is in the.