IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v8y2008i1n27.html
   My bibliography  Save this article

Bidding Strategies for Simultaneous Ascending Auctions

Author

Listed:
  • Wellman Michael P

    (University of Michigan)

  • Osepayshvili Anna

    (University of Michigan)

  • MacKie-Mason Jeffrey K

    (University of Michigan)

  • Reeves Daniel

    (Yahoo! Research)

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.

Suggested Citation

  • Wellman Michael P & Osepayshvili Anna & MacKie-Mason Jeffrey K & Reeves Daniel, 2008. "Bidding Strategies for Simultaneous Ascending Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-43, December.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:27
    DOI: 10.2202/1935-1704.1461
    as

    Download full text from publisher

    File URL: https://doi.org/10.2202/1935-1704.1461
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.2202/1935-1704.1461?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rosenthal, Robert W., 1993. "Bargaining rules of thumb," Journal of Economic Behavior & Organization, Elsevier, vol. 22(1), pages 15-24, September.
    2. Rosenthal, Robert W., 1993. "Rules of thumb in games," Journal of Economic Behavior & Organization, Elsevier, vol. 22(1), pages 1-13, September.
    3. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1366-1400.
    4. Robert J. Weber, 1997. "Making More from Less: Strategic Demand Reduction in the FCC Spectrum Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 529-548, September.
    5. Peters, Michael & Severinov, Sergei, 2006. "Internet auctions with many traders," Journal of Economic Theory, Elsevier, vol. 130(1), pages 220-245, September.
    6. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    7. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
    8. Sven de Vries & Rakesh V. Vohra, 2003. "Combinatorial Auctions: A Survey," INFORMS Journal on Computing, INFORMS, vol. 15(3), pages 284-309, August.
    9. Lehmann, Benny & Lehmann, Daniel & Nisan, Noam, 2006. "Combinatorial auctions with decreasing marginal utilities," Games and Economic Behavior, Elsevier, vol. 55(2), pages 270-296, May.
    10. R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
    11. Bikhchandani, Sushil & Mamer, John W., 1997. "Competitive Equilibrium in an Exchange Economy with Indivisibilities," Journal of Economic Theory, Elsevier, vol. 74(2), pages 385-413, June.
    12. William Novshek & Hugo Sonnenschein, 1982. "Fulfilled Expectations Cournot Duopoly with Information Acquisition and Release," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 214-218, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wellman, Michael P. & Sodomka, Eric & Greenwald, Amy, 2017. "Self-confirming price-prediction strategies for simultaneous one-shot auctions," Games and Economic Behavior, Elsevier, vol. 102(C), pages 339-372.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    2. Goossens, D.R. & Müller, R.J. & Spieksma, F.C.R., 2007. "Matrix bids in combinatorial auctions: expressiveness and micro-economic properties," Research Memorandum 016, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Ozan Candogan & Asuman Ozdaglar & Pablo A. Parrilo, 2015. "Iterative Auction Design for Tree Valuations," Operations Research, INFORMS, vol. 63(4), pages 751-771, August.
    4. Dries R. Goossens & Rudolf Müller & Frits C. R. Spieksma, 2010. "Algorithms for Recognizing Economic Properties in Matrix Bid Combinatorial Auctions," INFORMS Journal on Computing, INFORMS, vol. 22(3), pages 339-352, August.
    5. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1997. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 497-527, September.
    6. Kazuo Murota, 2016. "Discrete convex analysis: A tool for economics and game theory," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 1(1), pages 151-273, December.
    7. Lawrence M. Ausubel, 2006. "An Efficient Dynamic Auction for Heterogeneous Commodities," American Economic Review, American Economic Association, vol. 96(3), pages 602-629, June.
    8. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    9. Tim Roughgarden, 2018. "Complexity Theory, Game Theory, and Economics: The Barbados Lectures," Papers 1801.00734, arXiv.org, revised Feb 2020.
    10. Emiel Maasland & Sander Onderstal, 2006. "Going, Going, Gone! A Swift Tour of Auction Theory and its Applications," De Economist, Springer, vol. 154(2), pages 197-249, June.
    11. Lehmann, Daniel, 2020. "Quality of local equilibria in discrete exchange economies," Journal of Mathematical Economics, Elsevier, vol. 88(C), pages 141-152.
    12. Cramton Peter & Schwartz Jesse A, 2002. "Collusive Bidding in the FCC Spectrum Auctions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-20, December.
    13. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications,, Elsevier.
    14. Ausubel Lawrence M & Milgrom Paul R, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 1(1), pages 1-44, August.
    15. Ning Sun & Zaifu Yang, 2008. "A Double-Track Auction for Substitutes and Complements," KIER Working Papers 656, Kyoto University, Institute of Economic Research.
    16. Blumrosen, Liad & Nisan, Noam, 2010. "Informational limitations of ascending combinatorial auctions," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1203-1223, May.
    17. Martin Bichler & Vladimir Fux & Jacob Goeree, 2018. "A Matter of Equality: Linear Pricing in Combinatorial Exchanges," Information Systems Research, INFORMS, vol. 29(4), pages 1024-1043, December.
    18. Stefan Weishaar, 2007. "CO 2 emission allowance allocation mechanisms, allocative efficiency and the environment: a static and dynamic perspective," European Journal of Law and Economics, Springer, vol. 24(1), pages 29-70, August.
    19. Jawad Abrache & Teodor Crainic & Michel Gendreau & Monia Rekik, 2007. "Combinatorial auctions," Annals of Operations Research, Springer, vol. 153(1), pages 131-164, September.
    20. Fabrizio Barca, 2008. "An Agenda for a Reformed Cohesion Policy A place-based approach to meeting European Union challenges and expectations," EERI Research Paper Series EERI_RP_2008_06, Economics and Econometrics Research Institute (EERI), Brussels.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.