Expressiveness and Robustness of First-Price Position Auctions

Paul Dütting (), Felix Fischer () and David C. Parkes ()
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Paul Dütting: Department of Mathematics, London School of Economics, London WC2A 2AE, United Kingdom
Felix Fischer: School of Mathematical Sciences, Queen Mary University of London, London E1 4NS, United Kingdom
David C. Parkes: Harvard John A. Paulson School of Engineering and Applied Sciences, Harvard University, Cambridge, Massachusetts 02138

Mathematics of Operations Research, 2019, vol. 44, issue 1, 196-211

Abstract: Ideally, the properties of an economic mechanism should hold in a robust way across multiple equilibria and under varying assumptions regarding the information available to participants. Focusing on the design of robust position auctions, we seek mechanisms that possess an efficient equilibrium and guarantee high revenue in every efficient equilibrium, under complete and incomplete information. A generalized first-price auction that is expressive in the sense of allowing multidimensional bids turns out to be the only standard design able to achieve this goal, even when valuations are one dimensional. The equilibria under complete information are obtained via Bernheim and Whinston’s profit target strategies, those under incomplete information via an appropriate generalization thereof. Particularly interesting from a technical perspective is the incomplete information case, where the standard technique for establishing equilibrium existence due to Myerson is generalized to a setting in which the bid space has higher dimension than the valuation space.

Keywords: mechanism design; generalized first-price auction; profit target strategies (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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