- PAR ID:
- 10057396
- Date Published:
- Journal Name:
- ITCS 2018
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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Large fractions of online advertisements are sold via repeated second-price auctions. In these auctions, the reserve price is the main tool for the auctioneer to boost revenues. In this work, we investigate the following question: how can the auctioneer optimize reserve prices by learning from the previous bids while accounting for the long-term incentives and strategic behavior of the bidders? To this end, we consider a seller who repeatedly sells ex ante identical items via a second-price auction. Buyers’ valuations for each item are drawn independently and identically from a distribution F that is unknown to the seller. We find that if the seller attempts to dynamically update a common reserve price based on the bidding history, this creates an incentive for buyers to shade their bids, which can hurt revenue. When there is more than one buyer, incentive compatibility can be restored by using personalized reserve prices, where the personal reserve price for each buyer is set using the historical bids of other buyers. Such a mechanism asymptotically achieves the expected revenue obtained under the static Myerson optimal auction for F. Further, if valuation distributions differ across bidders, the loss relative to the Myerson benchmark is only quadratic in the size of such differences. We extend our results to a contextual setting where the valuations of the buyers depend on observed features of the items. When up-front fees are permitted, we show how the seller can determine such payments based on the bids of others to obtain an approximately incentive-compatible mechanism that extracts nearly all the surplus.more » « less
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A seller trades with
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Abstract We study how the mechanism used for assigning roles within teams affects team performance. Subjects play the takeover game in buyer–seller teams. Understanding optimal play is demanding for buyers and trivial for sellers, so teams should perform better if the buyer is the abler teammate. When teammates are allowed to jointly choose their roles, abler teammates tend to become buyers, but this is more than offset by disruptions to the learning process. We examine two potential sources for the latter effect and find that endogenous role assignment has a negative psychological and emotional effect on buyers.
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Bilateral trade is one of the most natural and important forms of economic interaction: A seller has a single, indivisible item for sale, and a buyer is potentially interested. The two parties typically have different, privately known valuations for the item, and ideally, they would like to trade if the buyer values the item more than the seller. The celebrated impossibility result by Myerson and Satterthwaite shows that any mechanism for this setting must violate at least one important desideratum. In this paper, we investigate a richer paradigm of bilateral trade, with many self-interested buyers and sellers on both sides of a single trade who cannot be excluded from the trade. We show that this allows for more positive results. In fact, we establish a dichotomy in the possibility of trading efficiently. If in expectation, the buyers value the item more, we can achieve efficiency in the limit. If this is not the case, then efficiency cannot be achieved in general. En route, we characterize trading mechanisms that encourage truth-telling, which may be of independent interest. We also evaluate our trading mechanisms experimentally, and the experiments align with our theoretical results.
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We study stationary equilibria in a sequential auction setting. A seller runs a sequence of standard first-price or second-price auctions to sell an indivisible object to potential buyers. The seller can commit to the rule of the auction and the reserve price of the current period but not to reserve prices of future periods. We prove the existence of stationary equilibria and establish a uniform Coase conjecture—at any point in time and in any stationary equilibrium, the seller’s profit from running sequential auctions converges to the profit of running an efficient auction as the period length goes to zero.more » « less