Simultaneous 2nd price item auctions with no-underbidding

DOI10.1016/J.GEB.2023.03.009MaRDI QIDQ6160126zbMATH OpenOpenAlexFDO

Authors Michal Feldman, Galia Shabtai

Publication date 23 June 2023

Published in Games and Economic Behavior (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2003.11857

zbMATH Keywords

algorithmic game theoryprice of anarchysimultaneous item bidding auctions

Mathematics Subject Classification ID

Algorithmic game theory and complexity (91A68) Auctions, bargaining, bidding and selling, and other market models (91B26)

Abstract: The literature on the Price of Anarchy (PoA) of simple auctions employs a no-overbidding assumption but has completely overlooked the no-underbidding phenomenon, which is evident in empirical studies on variants of the second price auction. In this work, we provide a theoretical foundation for the no-underbidding phenomenon. We study the PoA of simultaneous 2nd price auctions (S2PA) under a new natural condition of {em no underbidding}, meaning that agents never bid on items less than their marginal values. We establish improved (mostly tight) bounds on the PoA of S2PA under no underbidding for different valuation classes (including unit-demand, submodular, XOS, subadditive, and general monotone valuations), in both full-information and incomplete information settings. To derive our results, we introduce a new parameterized property of auctions, termed $(gamma,delta)$-revenue guaranteed, which implies a PoA of at least $gamma/(1+delta)$. Via extension theorems, this guarantee extends to coarse correlated equilibria (CCE) in full information settings, and to Bayesian PoA (BPoA) in settings with incomplete information and arbitrary (correlated) distributions. We then show that S2PA are $(1,1)$-revenue guaranteed with respect to bids satisfying no underbidding. This implies a PoA of at least $1/2$ for general monotone valuation, which extends to BPOA with arbitrary correlated distributions. Moreover, we show that $(lambda,mu)$-smoothness combined with $(gamma,delta)$-revenue guaranteed guarantees a PoA of at least $(gamma+lambda)/(1+delta+mu)$. This implies a host of results, such as a tight PoA of $2/3$ for S2PA with submodular (or XOS) valuations, under no overbidding and no underbidding. Beyond establishing improved bounds for S2PA, the no underbidding assumption sheds new light on the performance of S2PA relative to simultaneous 1st price auctions.

Recommendations

• Simultaneous auctions are (almost) efficient
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Cites work

• Auctions with anticipated emotions: overbidding, underbidding, and optimal reserve prices
• Bayesian combinatorial auctions
• Bayesian Combinatorial Auctions
• Combinatorial auctions with decreasing marginal utilities
• Composable and efficient mechanisms
• Intrinsic robustness of the price of anarchy
• Pricing multi-unit markets
• Simultaneous auctions are (almost) efficient
• The Price of Anarchy in Auctions
• Welfare guarantees for combinatorial auctions with item bidding

Cited in

(3)

• No-trade in second-price auctions with entry costs and secret reserve prices
• Second-price ad auctions with binary bids and markets with good competition
• How to bid in unified second-price auctions when requests are duplicated

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