TY - JOUR
T1 - Fraction auctions : the tradeoff between efficiency and running time
AU - Grigorieva, E.
AU - Herings, P.J.J.
AU - Müller, R.J.
AU - Vermeulen, A.J.
PY - 2012/1/1
Y1 - 2012/1/1
N2 - This paper studies the sales of a single indivisible object where bidders have continuous valuations. In grigorieva et al. [14] it was shown that, in this setting, query auctions necessarily allocate inefficiently in equilibrium. In this paper we propose a new sequential auction, called the c-fraction auction. We show the existence of an ex-post equilibrium, called bluff equilibrium, in which bidders behave truthfully except for particular constellations of observed bids at which it is optimal to pretend a slightly higher valuation. We show c-fraction auctions guarantee approximate efficiency at any desired level of accuracy, independent of the number of bidders, when bidders choose to play the bluff equilibrium. We discuss the running time and the efficiency in the bluff equilibrium. We show that by changing the parameter c of the auction we can trade off efficiency against running time.
AB - This paper studies the sales of a single indivisible object where bidders have continuous valuations. In grigorieva et al. [14] it was shown that, in this setting, query auctions necessarily allocate inefficiently in equilibrium. In this paper we propose a new sequential auction, called the c-fraction auction. We show the existence of an ex-post equilibrium, called bluff equilibrium, in which bidders behave truthfully except for particular constellations of observed bids at which it is optimal to pretend a slightly higher valuation. We show c-fraction auctions guarantee approximate efficiency at any desired level of accuracy, independent of the number of bidders, when bidders choose to play the bluff equilibrium. We discuss the running time and the efficiency in the bluff equilibrium. We show that by changing the parameter c of the auction we can trade off efficiency against running time.
U2 - 10.1016/j.ejor.2012.01.063
DO - 10.1016/j.ejor.2012.01.063
M3 - Article
SN - 0377-2217
VL - 220
SP - 577
EP - 587
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 2
ER -