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Strong Activity Rules for Iterative Combinatorial Auctions
"... Activity rules have emerged in recent years as an important aspect of practical auction design. The role of an activity rule in an iterative auction is to suppress strategic behavior by bidders and promote simple, continual, meaningful bidding and thus, price discovery. These rules find application ..."
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Activity rules have emerged in recent years as an important aspect of practical auction design. The role of an activity rule in an iterative auction is to suppress strategic behavior by bidders and promote simple, continual, meaningful bidding and thus, price discovery. These rules find application in the design of iterative combinatorial auctions for real world scenarios, for example in spectrum auctions, in airline landing slot auctions, and in procurement auctions. We introduce the notion of strong activity rules, which allow simple, consistent bidding strategies while precluding all behaviors that cannot be rationalized in this way. We design such a rule for auctions with budgetconstrained bidders, i.e., bidders with valuations for resources that are greater than their ability to pay. Such bidders are of practical importance in many market environments, and hindered from bidding in a simple and consistent way by the commonly used revealedpreference activity rule, which is too strong in such an environment. We consider issues of complexity, and provide two useful forms of information feedback to guide bidders in meeting strong activity rules. As a special case, we derive a strong activity rule for non budgetconstrained bidders. The ultimate choice of activity rule must depend, in part, on beliefs about the types of bidders likely to participate in an auction event because one cannot have a rule that is simultaneously strong for both budgetconstrained bidders and quasilinear bidders.
An Ascending MultiItem Auction with Financially Constrained Bidders ∗
, 2008
"... A number of heterogeneous items are to be sold to a group of potential bidders. Every bidder knows his own values over the items and his own budget privately. Due to budget constraint, bidders may not be able to pay up to their values. In such a market, a Walrasian equilibrium usually fails to exist ..."
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A number of heterogeneous items are to be sold to a group of potential bidders. Every bidder knows his own values over the items and his own budget privately. Due to budget constraint, bidders may not be able to pay up to their values. In such a market, a Walrasian equilibrium usually fails to exist and also the existing auctions might fail to allocate the items among the bidders. In this paper we first introduce a rationed equilibrium for a market situation with financially constrained bidders. Succeedingly we propose an ascending auction mechanism that always results in an equilibrium allocation and price system. By starting with the reservation price of each item, the auctioneer announces the current prices of the items in each step and the bidders respond with their demand sets at these prices. As long as there is overdemand, the auctioneer adjusts prices upwards for overdemanded items until a price system is reached at which either there is an underdemanded set, or there is neither overdemand nor underdemand anymore. In the latter case the auction stops. In the former case, precisely one item will be sold, the bidder buying the item leaves the auction and the auction continues with the remaining items and the remaining bidders. We prove that the auction finds a rationed equilibrium in a finite number of steps. In addition, we derive various properties of the allocation and price system obtained by the auction.
Revenue Comparisons for Auctions when Bidders Have Arbitrary Types
, 2004
"... This paper develops a methodology for characterizing expected revenue from auctions in which bidders’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence resul ..."
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This paper develops a methodology for characterizing expected revenue from auctions in which bidders’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence results. Another application shows that firstprice auctions yield higher expected revenue than secondprice auctions when bidders are risk averse and/or face financial constraints. This revenue ranking also extends to riskaverse bidders with general forms of nonexpected utility preferences.
Auctions for online display advertising exchanges: Approximation result
, 2012
"... Ad Exchanges are emerging Internet markets where advertisers may purchase display ad placements, in realtime and based on specific viewer information, directly from publishers via a simple auction mechanism. Advertisers join these markets with a prespecified budget and participate in multiple seco ..."
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Ad Exchanges are emerging Internet markets where advertisers may purchase display ad placements, in realtime and based on specific viewer information, directly from publishers via a simple auction mechanism. Advertisers join these markets with a prespecified budget and participate in multiple secondprice auctions over the length of a campaign. This paper studies the competitive landscape that arises in Ad Exchanges and the implications for publishers ’ decisions. Our first main contribution is to introduce the novel notion of a Fluid Mean Field Equilibrium (FMFE) that is behaviorally appealing, computationally tractable, and in some important cases yields a closedform characterization. Moreover, we show that a FMFE approximates well the rational behavior of advertisers in large markets. Our second main contribution is to use this framework to provide sharp prescriptions for key auction design decisions that publishers face in these markets, such as the reserve price, the allocation of impressions to the exchange versus an alternative channel, and the disclosure of viewers ’ information. Notably, we show that proper adjustment of the reserve price is key in (1) making profitable for the publisher to try selling all impressions in the exchange before utilizing the alternative channel; and (2) compensating for the thinner markets created by greater disclosure of viewers ’ information.
Priorfree Auctions for Budgeted Agents
, 2013
"... We consider priorfree auctions for revenue and welfare maximization when agents have a common budget. The abstract environments we consider are ones where there is a downwardclosed and symmetric feasibility constraint on the probabilities of service of the agents. These environments include positi ..."
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We consider priorfree auctions for revenue and welfare maximization when agents have a common budget. The abstract environments we consider are ones where there is a downwardclosed and symmetric feasibility constraint on the probabilities of service of the agents. These environments include position auctions where slots with decreasing clickthrough rates are auctioned to advertisers. We generalize and characterize the envyfree benchmark from Hartline and Yan [2011] to settings with budgets and characterize the optimal envyfree outcomes for both welfare and revenue. We give priorfree mechanisms that approximate these benchmarks. A building block in our mechanism is a clinching auction for position auction environments. This auction is a generalization of the multiunit clinching auction of Dobzinski et al. [2008] and a special case of the polyhedral clinching auction of Goel et al. [2012]. For welfare maximization, we show that this clinching auction isagood approximation to the envyfree optimal welfare forposition auction environments. For profit maximization, we generalize the random sampling profit extraction auction from Fiat et al. [2002] for digital goods to give a 10.0approximation to the envyfree optimal revenue in symmetric, downwardclosed environments. Even without budgets this revenue maximization question is of interest and we obtain an improved approximation bound of 7.5 (from 30.4 by Ha and Hartline [2012]).
ABSTRACT Strategic Betting for Competitive Agents
"... In many multiagent settings, each agent’s goal is to come out ahead of the other agents on some metric, such as the currency obtained by the agent. In such settings, it is not appropriate for an agent to try to maximize its expected score on the metric; rather, the agent should maximize its expected ..."
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In many multiagent settings, each agent’s goal is to come out ahead of the other agents on some metric, such as the currency obtained by the agent. In such settings, it is not appropriate for an agent to try to maximize its expected score on the metric; rather, the agent should maximize its expected probability of winning. In principle, given this objective, the game can be solved using gametheoretic techniques. However, most games of interest are far too large and complex to solve exactly. To get some intuition as to what an optimal strategy in such games should look like, we introduce a simplified game that captures some of their key aspects, and solve it (and several variants) exactly. Specifically, the basic game that we study is the following: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to its budget bi. The agent with the highest realized outcome wins (and agents only care about winning). We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.
Activity Rule Paper Click here to view linked References Strong Activity Rules for Iterative Combinatorial Auctions
"... Activity rules have emerged in recent years as an important aspect of practical auction design. The role of an activity rule in an iterative auction is to suppress strategic behavior by bidders and promote simple, continual, meaningful bidding and thus, price discovery. These rules find application ..."
Abstract
 Add to MetaCart
Activity rules have emerged in recent years as an important aspect of practical auction design. The role of an activity rule in an iterative auction is to suppress strategic behavior by bidders and promote simple, continual, meaningful bidding and thus, price discovery. These rules find application in the design of iterative combinatorial auctions for real world scenarios, for example in spectrum auctions, in airline landing slot auctions, and in procurement auctions. We introduce the notion of strong activity rules, which allow simple, consistent bidding strategies while precluding all behaviors that cannot be rationalized in this way. We design such a rule for auctions with budgetconstrained bidders, i.e., bidders with valuations for resources that are greater than their ability to pay. Such bidders are of practical importance in many market environments, and hindered from bidding in a simple and consistent way by the commonly used revealedpreference activity rule, which is too strong in such an environment. We consider issues of complexity, and provide two useful forms of information feedback to guide bidders in meeting strong activity rules. As a special case, we derive a strong activity rule for non budgetconstrained bidders. The ultimate choice of activity rule must depend, in part, on beliefs about the types of bidders likely to participate in an auction event because one cannot have a rule that is simultaneously strong for both
Choosing Fair Lotteries to Defeat the Competition
, 2008
"... We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget bi. The agent with the highest realized outcome wins (and agents only care about winning). This game is motivated by various realworld settings where agents each choose a ga ..."
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We study the following game: each agent i chooses a lottery over nonnegative numbers whose expectation is equal to his budget bi. The agent with the highest realized outcome wins (and agents only care about winning). This game is motivated by various realworld settings where agents each choose a gamble and the primary goal is to come out ahead. Such settings include patent races, stock market competitions, and R&D tournaments. We show that there is a unique symmetric equilibrium when budgets are equal. We proceed to study and solve extensions, including settings where agents must obtain a minimum outcome to win; where agents choose their budgets (at a cost); and where budgets are private information.
September 2005Revenue Comparisons for Auctions when Bidders Have Arbitrary Types ∗
, 2005
"... Abstract: This paper develops a methodology for characterizing expected revenue from auctions when bidders ’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence ..."
Abstract
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Abstract: This paper develops a methodology for characterizing expected revenue from auctions when bidders ’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence results. Another application shows that firstprice auctions yield higher expected revenue than secondprice auctions when bidders are risk averse and face financial constraints. This revenue ranking extends to riskaverse bidders with general forms of nonexpected utility preferences.
Optimal Contracting with WealthConstrained Operators of Unknown Ability
"... We examine how a project owner optimally selects a project operator and motivates him to deliver unobservable effort when potential operators are wealthconstrained. We show that either a pooling or a separating contract can arise in equilibrium. In a separating contract, the more capable potential ..."
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We examine how a project owner optimally selects a project operator and motivates him to deliver unobservable effort when potential operators are wealthconstrained. We show that either a pooling or a separating contract can arise in equilibrium. In a separating contract, the more capable potential operator is either selected more often but awarded a smaller share of profit, or selected less often but awarded a larger share of profit. JEL Classification Numbers: D440, D820, L140. September