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I think that I once heard that in Switzerland the second cheapest bidder is the one to get the contract, exactly to discourage someone aggressively underbidding all others. I could not verify that now though.


What is the right solution here from a game theory perspective?


Own two companies that agressively underbid all others?


That is deceptively simple. It might just work :D


Auction design is a very active research area and what the "right solution" is, is not so easy to figure out. This has huge applications in... adtech.




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