Name
Abstract | ||
|---|---|---|
Core-selecting combinatorial auctions have been introduced as an alternative to the Vickrey-Clarke-Groves (VCG) mechanism because VCG can result in payments that are not in the core with respect to bids, leading to unfair payments, unacceptably low revenues, and unstable outcomes. This raises an auction selection problem for an auctioneer deciding whether to employ a core-selecting auction or VCG mechanism in practice. The downside of a core-selecting auction is that it is not incentive compatible, as bidders have an incentive to reduce (shade) their bids below their true values. It has been argued that such bid shading in core-selecting auctions may lead to lower efficiency, lower revenue, and outcomes that are, on average, farther from the core with respect to true values, than the VCG mechanism. Using a much-studied auction environment, we address the auction selection problem faced by an auctioneer and obtain Bayes-Nash equilibrium bidding strategies when bidders are loss averse. We also bound the equilibrium strategies when bidders are risk-averse. This analysis demonstrates that when bidders are risk-averse or loss-averse, core-selecting auctions outperform the VCG mechanism in terms of revenue and stability, while yielding efficient allocations with high probability. We extend model of a core-selecting auction to risk-averse and loss-averse bidders.We derive bounds on equilibrium bidding strategies when bidders are risk-averse.We derive equilibrium bidding strategies when bidders are loss-averse.We compare the efficiency and revenue of the auction to the VCG benchmark.We employ an algorithm to find equilibria in a more complex combinatorial setting. |
Year | DOI | Venue |
|---|---|---|
2015 | 10.1016/j.dss.2015.08.007 | Decision Support Systems |
Keywords | Field | DocType |
Auctions/bidding,Core-selecting auctions,Loss aversion,Risk aversion,Combinatorial auctions | English auction,Economics,Vickrey auction,Combinatorial auction,Microeconomics,Generalized second-price auction,Vickrey–Clarke–Groves auction,Auction theory,Revenue equivalence,Double auction | Journal |
Volume | Issue | ISSN |
79 | C | 0167-9236 |
Citations | PageRank | References |
0 | 0.34 | 10 |
Authors | ||
3 | ||
Name | Order | Citations | PageRank |
|---|---|---|---|
| Mark Schneider | 1 | 0 | 0.34 |
| Robert Day | 2 | 193 | 15.90 |
| R. S. Garfinkel | 3 | 482 | 88.80 |