Sequential Auctions and Externalities

Abstract

Previous chapter Next chapter Full AccessProceedings Proceedings of the 2012 Annual ACM-SIAM Symposium on Discrete Algorithms (SODA)Sequential Auctions and ExternalitiesRenato Paes Leme, Vasilis Syrgkanis, and Eva TardosRenato Paes Leme, Vasilis Syrgkanis, and Eva Tardospp.869 - 886Chapter DOI:https://doi.org/10.1137/1.9781611973099.70PDFBibTexSections ToolsAdd to favoritesExport CitationTrack CitationsEmail SectionsAboutAbstract In many settings agents participate in multiple different auctions that are not necessarily implemented simultaneously. Future opportunities affect strategic considerations of the players in each auction, introducing externalities. Motivated by this consideration, we study a setting of a market of buyers and sellers, where each seller holds one item, bidders have combinatorial valuations and sellers hold item auctions sequentially. Our results are qualitatively different from those of simultaneous auctions, proving that simultaneity is a crucial aspect of previous work. We prove that if sellers hold sequential first price auctions then for unit-demand bidders (matching market) every subgame perfect equilibrium achieves at least half of the optimal social welfare, while for submodular bidders or when second price auctions are used, the social welfare can be arbitrarily worse than the optimal. We also show that a first price sequential auction for buying or selling a base of a matroid is always efficient, and implements the VCG outcome. An important tool in our analysis is studying first and second price auctions with externalities (bidders have valuations for each possible winner outcome), which can be of independent interest. We show that a Pure Nash Equilibrium always exists in a first price auction with externalities. Previous chapter Next chapter RelatedDetails Published:2012ISBN:978-1-61197-210-8eISBN:978-1-61197-309-9 https://doi.org/10.1137/1.9781611973099Book Series Name:ProceedingsBook Code:PR141Book Pages:xiii + 1757