He will model other sellers as if they were using the one-level models. That is, he thinks they will model others using policy models and make their decisions using the equations presented in Section 4.2. He will try to predict their bids and then try to find a bid for himself that the buyer will prefer more than all the bids of the other sellers. His model of the buyer will also be an intentional model. He will model the buyers as though they were implemented as explained in Section 4.2.

The algorithm he follows is to first use his models of the sellers to predict what bids they will submit. He has a model of the buyer , that tells him which bid she might pick given the set of bids submitted by all sellers . The seller uses this model to determine which of his bids will bring him higher profit, by first finding the set of bids he can make that will win:

And from these finding the one with the highest profit:

jmvidal@umich.edu

Wed Aug 21 07:12:37 EDT 1996