What is it?
This model demonstrates a very simple bidding market where buyers try to acquire a desired item at the best price in a competitive environment
How it works
The idea would be to have a bidder market with the following characteristics:
1 Seller or auctioneer who brings a good with identified characteristics: high and low pre-sale estimate
Bidders with different propensity to pay for the artwork (value-assessment)
Each Round (tick), the buyers decide to bid a higher amount or drop out. If the asked amount is below the bidder’s value assessment, they’ll bid. If it’s higher, the decision depends on their desire-to-win, if it goes beyond their max bidding amount (value-assessment + desire-to-win), they drop out. Then each bidder individually decides to either raise or not their desire-to-win according to the position of the current asked price in their value assessment (chance of winning) and the remaining competition. For instance, if there are 8 bidders remaining (small competitive arousal), they are unlikely to up their desire-to-win. But if there are only 2 bidders left, they are more likely to enter a bidding war and up their desire-to-win.
The market will run through rounds until only one bidder remains. The sale value of the Item is the last bidded amount.
The generated ABM tries to provide insights on the following question: How are art prices affected by the competitive arousal levels of multiple individuals interacting and competing in an auction sale?