On the Efficiency of All-Pay Mechanisms

Abstract

AbstractWe study the inefficiency of mixed equilibria, expressed as the price of anarchy, of all-pay auctions in three different environments: combinatorial, multi-unit and single-item auctions. First, we consider item-bidding combinatorial auctions where m all-pay auctions run in parallel, one for each good. For fractionally subadditive valuations, we strengthen the upper bound from 2 [22] to 1.82 by proving some structural properties that characterize the mixed Nash equilibria of the game. Next, we design an all-pay mechanism with a randomized allocation rule for the multi-unit auction. We show that, for bidders with submodular valuations, the mechanism admits a unique, 75% efficient, pure Nash equilibrium. The efficiency of this mechanism outperforms all the known bounds on the price of anarchy of mechanisms used for multi-unit auctions. Finally, we analyze single-item all-pay auctions motivated by their connection to contests and show tight bounds on the price of anarchy of social welfare, revenue and maximum bid.KeywordsNash EquilibriumValuation FunctionHigh BidderCombinatorial AuctionPrice AuctionThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.