Learning to bid: The design of auctions under uncertainty and adaptation
AbstractWe examine auction design in a context where symmetrically informed adaptive agents with common valuations learn to bid for a good. Despite the absence of private valuations, asymmetric information, or risk aversion, bidder strategies do not converge to the Bertrand–Nash equilibrium strategies even in the long run. Deviations from equilibrium strategies depend on uncertainty regarding the value of the good, auction structure, the agentsʼ learning model, and the number of bidders. Although individual agents learn Nash bidding strategies in isolation, the learning of each agent, by flattening the best-reply correspondence of other agents, blocks common learning. These negative externalities are more severe in second-price auctions, auctions with many bidders, and auctions where the good has an uncertain value ex post.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 74 (2012)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/622836
Auction design; Adaptive learning; Genetic algorithm;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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