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On the Inefficiency of Standard Multi-unit Auction Formats

14 settembre 2017 ore 16:00 - 17:00

Aula A411, Sede di Viale Romania, 32

Speaker: Vangelis Markakis, Athens University of Economics and Business

We study two standard multi-unit auction formats for allocating multiple units of a single good to multi-demand bidders. The first one is the Discriminatory Price Auction, which charges every winner his winning bids. The second is the Uniform Price Auction, which determines a uniform price to be paid per unit. Variants of both formats find applications ranging from the allocation of bonds to investors, to online sales over the internet, facilitated by popular online brokers.
For these formats, we consider two bidding interfaces: (i) standard bidding, which is most prevalent in the scientific literature, and (ii) uniform bidding, which is the most widely used interface in practice. We evaluate the economic inefficiency of the two formats for both bidding interfaces, by means of upper and lower bounds on the Price of Anarchy for pure equilibria and mixed Bayes-Nash equilibria. Our results reveal that these auction formats perform quite well in terms of the generated social welfare, being only a small constant factor away from the welfare at the optimal allocation, which provides further justification for their use in practice.
Our results for bidders with submodular valuation functions improve upon bounds that had been obtained in the recent literature. Moreover, we also consider bidders with subadditive valuation functions and obtain constant upper bounds there as well.
Based on joint works with Georgios Birmpas, Bart de Keijzer, Guido Schaefer, Orestis Telelis, Artem Tsikiridis