Approximation in Algorithmic Game Theory Robust Approximation Bounds for Equilibria and Auctions
Existence of Pure Equilibria in Uniform Price Multiple-unit Auctions with Private-value Bidders
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Transcript of Existence of Pure Equilibria in Uniform Price Multiple-unit Auctions with Private-value Bidders
[email protected]@cergecerge-ei.-ei.czcz
Michal BresMichal Breskyky
(Summer 2007)
Existence of Pure Existence of Pure Equilibria in Uniform Price Equilibria in Uniform Price
Multiple-unit Auctions Multiple-unit Auctions with Private-value with Private-value
BiddersBidders
Existence of Pure Equilibria in Uniform Price Multiple-unit Auctions with Private-
value Bidders
Literature:• Dasgupta and Maskin (1986) RES, Reny (1996) Econometrica, Simon and Zame (1990)
Econometrica, Jackson and Swinkels (1999) Econometrica.• Amman and Leininger (1996) GEB, Krishna and Morgan (1997) JET,
Engelbrecht-Wiggans and Kahn (2002) ET, Ausubel and Cramton (2005) ET, Back and Zender (1993) RFS, Noussair (1995) ET.
Results:• Equilibrium in multi-unit auctions exists.• Every equilibrium in auctions can be rearranged to pure weakly increasing one.
Technique:
• The shape of the payoff function when bids are equal (and some but not all are winning) - ties - the only source of discontinuities.
• In equilibrium no tie occurs (with positive probability) because every bidder is typically strictly better off if he bids slightly above the tie instead of on the tie.
• Therefore, when searching for an equilibrium one can a priori eliminate all player profiles in which ties occur with positive probability.
• Then the seller can choose any rule to break the ties with no influence on the set of bidder equilibrium strategies.
• Then the existence theorem by Reny (1999) applied for one specific tie-breaking rule guarantees the existence of equilibrium with any tie-breaking rule (e.g. the "random" rule that is usually considered the literature).
THE GAME
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• Examples: Vickrey auction, Pay-your-bid auction, Uniform-price auction, Dutch Auction, All-pay auction, and linear combination of these auctions.
• There is a bound such that no bidder has an incentive to bid above his value instead of bidding the value or below, In addition, in any tie below the value than the bidder prefers (strictly) to win the tie than to lose it.
THE GAME
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Ties and Tie-Breaking Rule Equivalence
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Ties and Tie-Breaking Rule Equivalence
Example - equilibrium does not exists with discontinuous distributions and random tie-breaking:
• Bidder 1 has value = 1 with probability 1.• Bidder 2 has value distributed uniformly on [1,2].• Claim: There is no equilibrium.• To any first bidder pure strategy the second bidder does not have best response.• Efficient tie-breaking rule breaks the ties in the favor of the second bidder equilibrium
exists • (but not with random tie-breaking).
• bouunded from above,
• sum upperr-semi continuous, and
• payoff secure,
then equilibrium exists by Reny (1999).
Equilibrium Existence in Game with Resricted Strategy Space
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Thank you for your attantion.