A new method for equilibrium selection in financial transmission right´s auctions

Existence of Multiple equilibria in electricity markets, especially financial transmission right (FTR) auctions is the main cause of ambiguity in the markets´ outcomes because in such situations, players do not have an efficient tool to deal with. In this paper, we introduce a new criterion for equilibrium selection in infinite games based on two new concepts of `value´ and `chance´. These two are dependent concepts which are chosen carefully to reflect the role of expected payoff and risk of one strategy in measuring the players´ incentives. The aforementioned method is then, applied on a FTR auction with two players on a three node test system.