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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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Looking at the bid picture: A framework for identifying reverse auctions in ecological systems
Abstract Biological market theory can be used to explain intraspecific cooperation, interspecific mutualism, and sexual selection through models of game theory. These models describe the interactions between organisms as two classes of traders (buyers/sellers) exchanging commodities in the form of goods (e.g. food, shelter, matings) and services (e.g. warning calls, protection). Here, we expand biological market theory to include auction theory where bidding serves to match buyers and sellers.In a reverse auction, the seller increases the value of the item or decreases the cost until a buyer steps forward. We provide several examples of ecological systems that may have reverse auctions as underlying mechanisms to form mutualistic relationships.We focus on the yellow baboon (Papio cynocephalus) mating system as a case study to propose how the mechanisms of a reverse auction, which have the unintended but emergent consequence of producing a mutually beneficial outcome that improves collective reproductive benefits of the troop in this multi‐female multi‐male polygynandrous social system. For the yellow baboon, we posit that the “seller” is the reproductively cycling female, and the “buyer” is a male looking to mate with a cycling female. To the male, the “item for the sale” is the opportunity to sire an offspring, the price is providing safety and foraging time (via consortship) to the female. The “increasing value of the item for sale” is the chance of conception, which increases with each cycle since a female has resumed cycling post‐partum. The female's sexual swelling is an honest indicator of that cycle's probability of conception, and since resident males can track a female's cycle since resumption, there is transparency. The males presumably know the chance of conception when choosing to bid by offering consortship.Across nature, this reverse auction game likely exists in other inter‐ and intraspecific social relationships. Considering an ecological system as a reverse auction broadens our view of social evolution and adaptations through the lens of human economic structures.
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- Award ID(s):
- 2010972
- PAR ID:
- 10516616
- Publisher / Repository:
- British Ecological Society
- Date Published:
- Journal Name:
- Journal of Animal Ecology
- ISSN:
- 0021-8790
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.1111/1365-2656.14085
