28,288 research outputs found
An Investigation Report on Auction Mechanism Design
Auctions are markets with strict regulations governing the information
available to traders in the market and the possible actions they can take.
Since well designed auctions achieve desirable economic outcomes, they have
been widely used in solving real-world optimization problems, and in
structuring stock or futures exchanges. Auctions also provide a very valuable
testing-ground for economic theory, and they play an important role in
computer-based control systems.
Auction mechanism design aims to manipulate the rules of an auction in order
to achieve specific goals. Economists traditionally use mathematical methods,
mainly game theory, to analyze auctions and design new auction forms. However,
due to the high complexity of auctions, the mathematical models are typically
simplified to obtain results, and this makes it difficult to apply results
derived from such models to market environments in the real world. As a result,
researchers are turning to empirical approaches.
This report aims to survey the theoretical and empirical approaches to
designing auction mechanisms and trading strategies with more weights on
empirical ones, and build the foundation for further research in the field
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Mechanism Design in Social Networks
This paper studies an auction design problem for a seller to sell a commodity
in a social network, where each individual (the seller or a buyer) can only
communicate with her neighbors. The challenge to the seller is to design a
mechanism to incentivize the buyers, who are aware of the auction, to further
propagate the information to their neighbors so that more buyers will
participate in the auction and hence, the seller will be able to make a higher
revenue. We propose a novel auction mechanism, called information diffusion
mechanism (IDM), which incentivizes the buyers to not only truthfully report
their valuations on the commodity to the seller, but also further propagate the
auction information to all their neighbors. In comparison, the direct extension
of the well-known Vickrey-Clarke-Groves (VCG) mechanism in social networks can
also incentivize the information diffusion, but it will decrease the seller's
revenue or even lead to a deficit sometimes. The formalization of the problem
has not yet been addressed in the literature of mechanism design and our
solution is very significant in the presence of large-scale online social
networks.Comment: In The Thirty-First AAAI Conference on Artificial Intelligence, San
Francisco, US, 04-09 Feb 201
Descending Price Optimally Coordinates Search
Investigating potential purchases is often a substantial investment under
uncertainty. Standard market designs, such as simultaneous or English auctions,
compound this with uncertainty about the price a bidder will have to pay in
order to win. As a result they tend to confuse the process of search both by
leading to wasteful information acquisition on goods that have already found a
good purchaser and by discouraging needed investigations of objects,
potentially eliminating all gains from trade. In contrast, we show that the
Dutch auction preserves all of its properties from a standard setting without
information costs because it guarantees, at the time of information
acquisition, a price at which the good can be purchased. Calibrations to
start-up acquisition and timber auctions suggest that in practice the social
losses through poor search coordination in standard formats are an order of
magnitude or two larger than the (negligible) inefficiencies arising from
ex-ante bidder asymmetries.Comment: JEL Classification: D44, D47, D82, D83. 117 pages, of which 74 are
appendi
Choosing between Auctions and Negotiations in Online B2B Markets for IT Services: The Effect of Prior Relationships and Performance
The choice of contract allocation mechanism in procurement affects such aspects of transactions as information exchange between buyer and supplier, supplier competition, pricing and, eventually, performance. In this study we investigate the buyer’s choice between reverse auctions and bilateral negotiations as an allocation mechanism for IT services contracts. Prior studies into allocation mechanism choice focused on factors pertaining to discrete exchange situation, such as con-tract complexity or availability of suppliers. We broaden the research by focusing on buyers’ past exchange relationships with vendors. Based on the literature on the economics of contracting and agency theory, we hypothesize that prior re-peat interaction with vendors favors the use of negotiations over auctions in the next transaction, while the need to explore the marketplace due to buyer’s inexperience or dissatisfaction with vendor’s performance in the most recent project leads to the use of auctions instead of negotiations. We find support for these hypotheses in a longitudinal dataset of 2,081 IT projects realized by 91 repeat buyers at a leading online services marketplace over a period of eight years. Taken together, the results show that analyzing B2B auctions and negotiations should move beyond analyzing discrete instances and instead analyze them in the context of the individual firm’s history and supplier strategy.outsourcing;IT services;online marketplace;reverse auctions
Selling Privacy at Auction
We initiate the study of markets for private data, though the lens of
differential privacy. Although the purchase and sale of private data has
already begun on a large scale, a theory of privacy as a commodity is missing.
In this paper, we propose to build such a theory. Specifically, we consider a
setting in which a data analyst wishes to buy information from a population
from which he can estimate some statistic. The analyst wishes to obtain an
accurate estimate cheaply. On the other hand, the owners of the private data
experience some cost for their loss of privacy, and must be compensated for
this loss. Agents are selfish, and wish to maximize their profit, so our goal
is to design truthful mechanisms. Our main result is that such auctions can
naturally be viewed and optimally solved as variants of multi-unit procurement
auctions. Based on this result, we derive auctions for two natural settings
which are optimal up to small constant factors:
1. In the setting in which the data analyst has a fixed accuracy goal, we
show that an application of the classic Vickrey auction achieves the analyst's
accuracy goal while minimizing his total payment.
2. In the setting in which the data analyst has a fixed budget, we give a
mechanism which maximizes the accuracy of the resulting estimate while
guaranteeing that the resulting sum payments do not exceed the analysts budget.
In both cases, our comparison class is the set of envy-free mechanisms, which
correspond to the natural class of fixed-price mechanisms in our setting.
In both of these results, we ignore the privacy cost due to possible
correlations between an individuals private data and his valuation for privacy
itself. We then show that generically, no individually rational mechanism can
compensate individuals for the privacy loss incurred due to their reported
valuations for privacy.Comment: Extended Abstract appeared in the proceedings of EC 201
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