28,975 research outputs found
Selling to a No-Regret Buyer
We consider the problem of a single seller repeatedly selling a single item
to a single buyer (specifically, the buyer has a value drawn fresh from known
distribution in every round). Prior work assumes that the buyer is fully
rational and will perfectly reason about how their bids today affect the
seller's decisions tomorrow. In this work we initiate a different direction:
the buyer simply runs a no-regret learning algorithm over possible bids. We
provide a fairly complete characterization of optimal auctions for the seller
in this domain. Specifically:
- If the buyer bids according to EXP3 (or any "mean-based" learning
algorithm), then the seller can extract expected revenue arbitrarily close to
the expected welfare. This auction is independent of the buyer's valuation ,
but somewhat unnatural as it is sometimes in the buyer's interest to overbid. -
There exists a learning algorithm such that if the buyer bids
according to then the optimal strategy for the seller is simply
to post the Myerson reserve for every round. - If the buyer bids according
to EXP3 (or any "mean-based" learning algorithm), but the seller is restricted
to "natural" auction formats where overbidding is dominated (e.g. Generalized
First-Price or Generalized Second-Price), then the optimal strategy for the
seller is a pay-your-bid format with decreasing reserves over time. Moreover,
the seller's optimal achievable revenue is characterized by a linear program,
and can be unboundedly better than the best truthful auction yet simultaneously
unboundedly worse than the expected welfare
Auctioning Process Innovations when Losers’ Bids Determine Royalty Rates
We consider a licensing mechanism for process innovations that combines a license auction with royalty contracts to those who lose the auction. Firms’ bids are dual signals of their cost reductions: the winning bid signals the own cost reduction to rival oligopolists, whereas the losing bid influences the beliefs of the innovator who uses that information to set the royalty rate. We derive conditions for existence of a separating equilibrium, explain why a sufficiently high reserve price is essential for such an equilibrium, and show that the innovator generally benefits from the proposed mechanism
Bidding Behavior in Multi-Unit Auctions - An Experimental Investigation
We present laboratory experiments of five different multi-unit auction mechanisms. Two units of a homogeneous object were auctioned off among two bidders with flat demand for two units. We test whether expected demand reduction occurs in open and sealed-bid uniform-price auctions. Revenue equivalence is tested for these auctions as well as for the Ausubel, the Vickrey and the discriminatory sealed-bid auction. Furthermore, we compare the five mechanisms with respect to the efficient allocation of the units.Multi-Unit Auctions, Demand Reduction, Experimental Economics
Exclusion in the All-Pay Auction: An Experimental Investigation
Contest or auction designers who want to maximize the overall revenue are frequently con- cerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able contestant in favor of greater homogeneity among the remaining contestants, even if the theoretical exclusion principle predicts otherwise. This is because the strongest contestants con- siderably overexert. A possible explanation is that these contestants are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a low but secure pay-off.experiments, contests, all-pay auction, heterogeneity, regret aversion
Auctioning Process Innovations when Losers’ Bids Determine Royalty Rates
We consider a licensing mechanism for process innovations that combines a license auction with royalty contracts to those who lose the auction. Firms’ bids are dual signals of their cost reductions: the winning bid signals the own cost reduction to rival oligopolists, whereas the losing bid influences the beliefs of the innovator who uses that information to set the royalty rate. We derive conditions for existence of a separating equilibrium, explain why a sufficiently high reserve price is essential for such an equilibrium, and show that the innovator generally benefits from the proposed mechanism.Patents; licensing; auctions; royalty; innovation; R&D; mechanism design
Exclusion in the all-pay auction: An experimental investigation
Contest or auction designers who want to maximize the overall revenue are frequently concerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able contestant in favor of greater homogeneity among the remaining contestants, even if the theoretical exclusion principle predicts otherwise. This is because the strongest contestants considerably overexert. A possible explanation is that these contestants are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a low but secure pay-off. -- Steht bei einer Auktion oder einem Turnier die Maximierung der Gesamtanstrengung aller Teilnehmer im Vordergrund, besteht ein Zielkonflikt zwischen der Homogenität der Teilnehmer und der Teilnahme ausgesprochen starker Wettbewerber. Aus der theoretischen Literatur ist das sogenannte Ausschlussprinzip bekannt, das besagt, dass der leistungsstärkste Agent aus einer Gruppe von Teilnehmern ausgeschlossen werden sollte, wenn das Leistungsgefälle zu groß ist. Dieses Prinzip wird einem experimentellen Test unterzogen. Es zeigt sich, dass sich der Ausschluss des stärksten Teilnehmers nie lohnt, da sich dieser weit über die Maßen anstrengt, sofern er an der Auktion teilnimmt. Die übermäßige Anstrengung ist umso prominenter, je überlegener der stärkste Teilnehmer gegenüber dem zweitstärksten ist. Dieses Verhalten kann mit einer Aversion gegenüber dem Gefühl des Bedauerns erklärt werden, das die stärksten Teilnehmer spüren, wenn sie sich weniger anstrengen und in Folge den Wettbewerb verlieren.experiments,contests,all-pay auction,heterogeneity,regret aversion
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