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A learning approach to auctions

Author

Listed:
  • Hon-Snir, Shlomit
  • Monderer, Dov
  • Sela, Aner

Abstract

We analyze a repeated first-price auction in which the types of the players are determined before the first round. It is proved that if every player is using either a belief-based learning scheme with bounded recall or a generalized fictitious play learning scheme, then for sufficiently large time, the players' bids are in equilibrium in the one-shot auction in which the types are commonly known.

Suggested Citation

  • Hon-Snir, Shlomit & Monderer, Dov & Sela, Aner, 1997. "A learning approach to auctions," Papers 97-11, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2900
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    Cited by:

    1. Hailu, Atakelty & Schilizzi, Steven & Thoyer, Sophie, 2005. "Assessing the performance of auctions for the allocation of conservation contracts: Theoretical and computational approaches," 2005 Annual meeting, July 24-27, Providence, RI 19478, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Atanasios Mitropoulos, 2001. "Learning Under Little Information: An Experiment on Mutual Fate Control," Game Theory and Information 0110003, University Library of Munich, Germany.
    3. Santiago R. Balseiro & Yonatan Gur, 2019. "Learning in Repeated Auctions with Budgets: Regret Minimization and Equilibrium," Management Science, INFORMS, vol. 65(9), pages 3952-3968, September.
    4. Xiaotie Deng & Xinyan Hu & Tao Lin & Weiqiang Zheng, 2021. "Nash Convergence of Mean-Based Learning Algorithms in First-Price Auctions," Papers 2110.03906, arXiv.org, revised Aug 2025.
    5. Holzman, Ron & Kfir-Dahav, Noa & Monderer, Dov & Tennenholtz, Moshe, 2004. "Bundling equilibrium in combinatorial auctions," Games and Economic Behavior, Elsevier, vol. 47(1), pages 104-123, April.
    6. Cabrales, Antonio & Serrano, Roberto, 2011. "Implementation in adaptive better-response dynamics: Towards a general theory of bounded rationality in mechanisms," Games and Economic Behavior, Elsevier, vol. 73(2), pages 360-374.
    7. Berger, Ulrich, 2007. "Brown's original fictitious play," Journal of Economic Theory, Elsevier, vol. 135(1), pages 572-578, July.
    8. Amy Greenwald & Karthik Kannan & Ramayya Krishnan, 2010. "On Evaluating Information Revelation Policies in Procurement Auctions: A Markov Decision Process Approach," Information Systems Research, INFORMS, vol. 21(1), pages 15-36, March.
    9. Saran, R.R.S. & Serrano, R., 2010. "Ex-Post regret learning in games with fixed and random matching: the case of private values," Research Memorandum 032, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    10. Balachander Subramanian & Kannan Karthik & Schwartz David G, 2009. "A Theoretical and Empirical Analysis of Alternate Auction Policies for Search Advertisements," Review of Marketing Science, De Gruyter, vol. 7(1), pages 1-51, December.
    11. Ashish Arora & Amy Greenwald & Karthik Kannan & Ramayya Krishnan, 2007. "Effects of Information-Revelation Policies Under Market-Structure Uncertainty," Management Science, INFORMS, vol. 53(8), pages 1234-1248, August.
    12. Saran, Rene & Serrano, Roberto, 2014. "Ex-post regret heuristics under private values (I): Fixed and random matching," Journal of Mathematical Economics, Elsevier, vol. 54(C), pages 97-111.
    13. Krishnamurthy Iyer & Ramesh Johari & Mukund Sundararajan, 2014. "Mean Field Equilibria of Dynamic Auctions with Learning," Management Science, INFORMS, vol. 60(12), pages 2949-2970, December.
    14. Dawid, Herbert, 1999. "On the convergence of genetic learning in a double auction market," Journal of Economic Dynamics and Control, Elsevier, vol. 23(9-10), pages 1545-1567, September.
    15. Fernando Louge & Frank Riedel, 2012. "Evolutionary Stability in First Price Auctions," Dynamic Games and Applications, Springer, vol. 2(1), pages 110-128, March.
    16. Johannes Horner & Julian Jamison, 2003. "Private Information in Repeated Auctions," Levine's Bibliography 666156000000000108, UCLA Department of Economics.
    17. Amir Danak & Shie Mannor, 2012. "Approximately optimal bidding policies for repeated first-price auctions," Annals of Operations Research, Springer, vol. 196(1), pages 189-199, July.
    18. Johannes Horner & Julian Jamison, 2006. "Private Information in Sequential Common-Value Auctions," Discussion Papers 1422, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    19. Mitropoulos, Atanasios, 2001. "Learning under minimal information: An experiment on mutual fate control," Journal of Economic Psychology, Elsevier, vol. 22(4), pages 523-557, August.
    20. Berger, Ulrich, 2008. "Learning in games with strategic complementarities revisited," Journal of Economic Theory, Elsevier, vol. 143(1), pages 292-301, November.
    21. Metzger, Lars Peter, 2014. "Invader strategies in the war of attrition with private information," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 160-166.

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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