Auctions Flashcards
Difference between auctions and voting
Auctions: Used to allocated scarce resources
Voting: Used to make collective decisions
Difference between negotiation and (auctions/voting)
Negotiation is bilateral and auctions/voting is betwen more than 2 agents
Auctions desirable properties
Maximise social welfare (allocate resources to who needs them the most)
Individually rational (not worse off from participating)
Not be manipulable (agents should be incentivized to behave truthfully)
Sometimes can also be to maximise revenue
Open-outcry auctions
English auction
Dutch auction
Japanese auction
Sealed-bid auctions
First-price auction
Second-price (Vickrey) auction
All-pay auction
Families for single indivisible items
Open-outcry auctions
Sealed-bid auctions
Maximizing social welfare in single-item auction
Awarding item to bidder with the highest value
Allocate item to bidder with highest bid
What type of games are auctions?
Auctions aren’t strategic-form games, they are bayesian games
Vickrey auction optimal strategy (Weakly dominant strategy)
Bidder should bid true valuation
Vickrey auction truthful
Strategy-proof
Incentive-compatible in dominant strategies
First-price sealed-bid auction vs Dutch auction
Strategically equivalent
Modelling english auction
Extensive form game
Second-price sealed-bid (Vickrey) vs English
Weakly strategically equivalent
Bidding up to true valuation (English) vs bidding true valuation immediately (Vickrey)
Only holds for the independent private value model
Decision theoretic framework
Bidder doesn’t know private valuations or bids of other players, but has beliefs about them
Revenue equivalence
All of the 4 auctions are revenue equivalent
