Expressiveness and robustness of first-price position auctions

Paul Dütting, Felix Fischer and David C. Parkes

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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: simplicity-expressiveness tradeoffs; generalized first-price auction; profit-target strategies (search for similar items in EconPapers)
JEL-codes: J1 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2019-02-01
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Mathematics of Operations Research, 1, February, 2019, 44(1), pp. 196-211. ISSN: 0364-765X

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:85877

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