13: Evaluation of Auction Protocols Flashcards
1
Q
What is social welfare ?
A
The total benefit/utility received by each participant.
2
Q
When is an auction Pareto efficient ?
A
It’s when the item goes to the highest valuation (=/= bid).
3
Q
Which auctions are and aren’t Pareto efficient ?
Why ?
A
- English auction is Pareto efficient as valuations are publicly known, and so the highest valuation will be the highest bid.
- English auction with reserve price isn’t as a bidder with highest valuation will not get the item, if his bid is below the reserve price.
- Dutch isn’t as you can lose while the price decreases even if you have the highest valuation.
- 1st-Price isn’t as the dom strat is to bid below your truthful valuation
- 2nd-Price is as the dom strat is to bid your truthful valuation
4
Q
Which bids are computationally efficient ?
Why ?
A
- English as the valuations are publicly known
- 2nd-Price as one needs to bid the true valuation
No complex processing required.
5
Q
What is a reserve price ?
A
A threshold below which submitted bids do not win, ie the item isn’t sold.
6
Q
How does one calculate the expected payoff ?
A
SUM(gain * probability)
7
Q
Give the 3 types of player attitudes and what they seek.
A
- Risk Neutral seeks highest expected payoff.
- Risk Seeking seeks highest possible payoff.
- Risk Averse seeks highest win probability.
