Bidding Strategies for Simultaneous Ascending Auctions
In B.E. Journal of Theoretical Economics, 8(1). 2008.Copyright ©1999-2009 The Berkeley Electronic Press. All rights reserved. Publisher's version is available at http://www.bepress.com/bejte/vol8/iss1/art27.
Abstract
Simultaneous ascending auctions present agents with various strategic problems, depending on preference structure. As long as bids represent non-repudiable offers, submitting non-contingent bids to separate auctions entails an exposure problem: bidding to acquire a bundle risks the possibility of obtaining an undesired subset of the goods. With multiple goods (or units of a homogeneous good) bidders also need to account for their own effects on prices. Auction theory does not provide analytic solutions for optimal bidding strategies in the face of these problems. We present a new family of decision-theoretic bidding strategies that use probabilistic predictions of final prices: self-confirming distribution-prediction strategies. Bidding based on these is provably not optimal in general. But evidence using empirical game-theoretic methods we developed indicates the strategy is quite effective compared to other known methods when preferences exhibit complementarities. When preferences exhibit substitutability, simpler demand-reduction strategies address the own price effect problem more directly and perform better.
BibTex
@article{ wellman-annaose-jmm-reeves_bejte08_saa,
number = "1",
volume = "8",
paperID = "BEJTE-08",
author = "Michael P. Wellman and Anna V. Osepayshvili and Jeffrey K. MacKie-Mason and Daniel M. Reeves",
note = "Article 27. Available at http://www.bepress.com/bejte/vol8/iss1/art27",
title = "Bidding Strategies for Simultaneous Ascending Auctions",
journal = "B.E. Journal of Theoretical Economics",
year = "2008"
}
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Bidding Strategies for Simultaneous Ascending Auctions: Appendix
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