** Next:** Exact Value
** Up:** General Approach
** Previous:** General Approach

##

Simplified Abstraction

In the simple model, there are items to be auctioned off in
sequence (first item 0, then item 1, etc.). The bidder must place a
bid for each item , and after each bid, a closing price
is chosen for the corresponding item from a distribution specific to
the item. If the bid matches or exceeds the closing price, , the bidder holds item , . Otherwise, the bidder does
not hold the item, . The bidder's utility is a function of its
final vector of holdings
and its cost is a
function of the
holdings and the vector of closing prices, .
We will formalize the problem of optimal bid selection and develop a
series of approximations to make the problem solvable.

**Subsections**

Peter Stone
2003-09-24