The bidder’s payoffs for each possible equilibrium in a certain game scenario will be modeled in this section. The possible equilibria include pure strategy NE and mixed strategy NE. In a mixed strategy NE, the probability of playing effort H and that of playing A are modeled. The modeling begins with two-bidder games with one strong bidder, continues to three-bidder and four-bidder games with one strong bidder, and finishes at games with two strong bidders. A particular interest is on the strong bidder’s probability of
playing H. In terms of the effectiveness of bid compensation, the effectiveness is defined by the amount of bid compensation required to meet the strong bidder’s probability of playing H desired by the owner. The lower the amount of required bid compensation is, the higher the effectiveness is.