An Externality Robust Auction
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An Externality Robust Auction
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Author : Björn Bartling
language : en
Publisher:
Release Date : 2016
An Externality Robust Auction written by Björn Bartling and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Behavioral robustness is essential in mechanism design. Existing papers focus on robustness as captured by dominant strategies. This paper studies the novel concept of externality-robustness, which addresses players' motives to affect other players' monetary payoffs. One example is externalities due to spite, which has been used to explain overbidding in second-price auctions. We show theoretically and experimentally that a trade-off exists between dominant-strategy implementation and externality-robust implementation. In particular, we derive the externality-robust counterpart of the second-price auction. Our experiments replicate the earlier finding of overbidding in the second-price auction, but we find that average bids equal value in the externality-robust auction. Our data also reveal that both auctions produce the same level of efficiency, suggesting that both dimensions of robustness are equally important. Our results are relevant for mechanism design in general, because the concept of externality-robustness is applicable to arbitrary mechanism design problems.
An Externality Robust Auction
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Author : Björn Bartling
language : en
Publisher:
Release Date : 2014
An Externality Robust Auction written by Björn Bartling and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
First Price And Second Price Auctions With Externalities
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Author : Chulyoung Kim
language : en
Publisher:
Release Date : 2023
First Price And Second Price Auctions With Externalities written by Chulyoung Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
We consider a scenario where a single indivisible object is auctioned off to three bidders and among the three bidders there is one bidder whose winning imposes a positive or negative externality on the other two bidders. We theoretically and experimentally compare two standard sealed-bid auction formats, first-price and second-price auctions, under complete information. Using a refinement of undominated Nash equilibria, we analyze equilibrium bids and outcomes in the two auction formats. Our experimental results show that overbidding relative to equilibrium bids is prevalent, especially in second-price auctions, and this leads to higher revenue and lower efficiency in second- price auctions than in first-price auctions, especially under negative externalities. Our results are consistent with previous experimental findings that bidders tend to overbid more in second-price auctions than in first-price auctions, and they suggest that such a tendency is robust to the introduction of externalities.
Discovering Prices
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Author : Paul Milgrom
language : en
Publisher: Columbia University Press
Release Date : 2017-05-23
Discovering Prices written by Paul Milgrom and has been published by Columbia University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-05-23 with Business & Economics categories.
Traditional economic theory studies idealized markets in which prices alone can guide efficient allocation, with no need for central organization. Such models build from Adam Smith’s famous concept of an invisible hand, which guides markets and renders regulation or interference largely unnecessary. Yet for many markets, prices alone are not enough to guide feasible and efficient outcomes, and regulation alone is not enough, either. Consider air traffic control at major airports. While prices could encourage airlines to take off and land at less congested times, prices alone do just part of the job; an air traffic control system is still indispensable to avoid disastrous consequences. With just an air traffic controller, however, limited resources can be wasted or poorly used. What’s needed in this and many other real-world cases is an auction system that can effectively reveal prices while still maintaining enough direct control to ensure that complex constraints are satisfied. In Discovering Prices, Paul Milgrom—the world’s most frequently cited academic expert on auction design—describes how auctions can be used to discover prices and guide efficient resource allocations, even when resources are diverse, constraints are critical, and market-clearing prices may not even exist. Economists have long understood that externalities and market power both necessitate market organization. In this book, Milgrom introduces complex constraints as another reason for market design. Both lively and technical, Milgrom roots his new theories in real-world examples (including the ambitious U.S. incentive auction of radio frequencies, whose design he led) and provides economists with crucial new tools for dealing with the world’s growing complex resource-allocation problems.
A Very Robust Auction Mechanism
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Author : Richard P. McLean
language : en
Publisher:
Release Date : 2018
A Very Robust Auction Mechanism written by Richard P. McLean and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
The All Pay Auction With Complete Information And Identity Dependent Externalities
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Author : Bettina Klose
language : en
Publisher:
Release Date : 2013
The All Pay Auction With Complete Information And Identity Dependent Externalities written by Bettina Klose and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Ascending Auctions For Markets With Externalities And Applications To Routing In Wireless Networks
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Author : Michael Pavlin
language : en
Publisher:
Release Date : 2006
Ascending Auctions For Markets With Externalities And Applications To Routing In Wireless Networks written by Michael Pavlin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
We encode a model of a wireless network with the general allocation model and develop an auction with a compact bidding space. Optimality results are supported by empirical results showing the mechanism finds good allocations and, relative to a VCG auction, generates higher auction revenues. This thesis addresses the problem of finding socially optimal routing allocations in wireless networks with selfish users. We model the problem as a resource allocation problem in a market with externalities. Finding an optimal solution to the underlying resource allocation problem requires solving a mathematical program with non-convex constraints which is difficult to approach using traditional distributed price-mediated allocation mechanisms. We consider centralized ascending auction mechanisms as robust allocation techniques. A general allocation model is developed which can be used to encode a wide variety of markets including markets with externalities. We show that an ascending auction over this model is approximately optimal given myopic bidding.
Robust Competitive Auctions
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Author : Seungjin Han
language : en
Publisher:
Release Date : 2014
Robust Competitive Auctions written by Seungjin Han and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Auction Behavior
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Author : Youxin Hu
language : en
Publisher:
Release Date : 2009
Auction Behavior written by Youxin Hu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with Consumer behavior categories.
Abstract: Standard literature on auctions considers isolated markets with bidders that are ex ante identical and independent. My dissertation research considers the behavior of bidders and sellers when they take into account other auctions and bidders' relative roles outside of a given auction. I further extend this investigation through classroom experiments. In the first chapter, I study bidders' optimal strategies under negative externalities (i.e., the auction may incur losses (instead of zero payoffs) to the losing bidders). I construct a model of auction with three bidders. One bidder is special in the sense that if he wins, both of the other bidders will incur a loss; the other two bidders are regular in the sense that as in a traditional auction, if one of them wins, the losing bidders will receive zero payoffs. Intuitively one expects regular bidders to bid more aggressively than normal to avoid the loss. However, I find that in an ascending clock auction, in equilibrium regular bidders bid less aggressively and quit before reaching their private values. This occurs because a regular bidder may have to bid above his value in order to win against the special bidder and thus risks negative profit by bidding aggressively. Since both regular bidders avoid the externality if either wins, there is a free riding incentive. Despite free riding, in most cases the clock auction is ex post efficient However, in first-price sealed bid auctions free riding and aggressive bidding incentives are simultaneous, so ex post efficiency is less frequent. I also conducted classroom experiments which suggest that bidders more often exhibit aggressive bidding rather than free riding in an ascending clock auction; furthermore, I show that in first-price sealed bid auctions, regular bidders bid more aggressively than the special bidder, indicating aggressive bidding incentives dominate free riding incentives. In the second chapter, I construct an auction model in which both number of bidders and sellers' reserve prices are endogenously determined, and estimate the value distribution among eBay bidders. I assume each bidder has a choice of auctions with different reserve prices and other auction specific factors (seller's reputation, shipping cost, auction duration, etc.). I show that in equilibrium, 1) each bidder must be indifferent to entry in any auction, and 2) each seller's reserve price must maximize expected revenue given auction structure and bidder entry behavior, which jointly determines the equilibrium number of bidders in each auction. Few theoretical works have been done to find the positive optimal reserve price when the number of bidder is endogenous. And previous empirical work usually uses observed bids to estimate bidders' value distribution and take sellers' choice (e.g., reserve prices) as exogenous. Based on the equilibrium relationship described above, my model allows estimation of bidders' value distribution not only from observed bids, but also from the number of bidders and reserve prices. To apply this structural estimation method, I use eBay digital camera auction data to estimate bidders' value distribution from bid observations and reserve prices.
Putting Auction Theory To Work
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Author : Paul Milgrom
language : en
Publisher: Cambridge University Press
Release Date : 2004-01-12
Putting Auction Theory To Work written by Paul Milgrom and has been published by Cambridge University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004-01-12 with Business & Economics categories.
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.