Abstract
We consider the problem of auction design with agents that have interdependent values, i.e. values that depend on each others' private signals. We adopt the contingent bids model of Dasgupta and Maskin [3], and allow agents to submit bids of the form if player 1 bids $x for good A then I will bid $y. Our main contribution is to identify a specific linear valuation model for which there exists an efficient auction for a single item, and then extend this to provide an approximately efficient combinatorial auction with single-minded bidders. In both auction, winners and payments are computed from the fixed point of the valuation mapping defined by contingent bids. We also adopt search in order to construct a variation on the single-item auction with improved revenue. In closing, we discuss the (many) challenges in moving to more general models of interdependent valuations.
Highlights
We consider the problem of auction design with agents that have interdependent values
We first introduce this for the single item allocation problem and later extend the language to allow for combinatorial auctions with single minded bidders
Unlike the model of Dasgupta and Maskin [3] (DM), which we adopt in this paper, the model of Dash et al requires that the mechanism knows the valuation function and signal domains of each bidder
Summary
We consider the problem of auction design with agents that have interdependent values. In our grid computing example, all research groups would have to agree on a common language to discuss the potential value of some new data In this aspect, our focus on contingent bids differentiates this work from the earlier work in distributed AI of Dash et al [4] and Ito et al [5, 7], who consider direct revelation mechanisms. We define a linear contingent-bid language and establish necessary and sufficient conditions for bids to satisfy the technical conditions required for the existence of an efficient auction We first introduce this for the single item allocation problem and later extend the language to allow for combinatorial auctions with single minded bidders. The problem relates to the amount of information that bidders are required to report to an auction about the possible valuations of other bidders
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