Strategic Bidding in Knapsack Auctions
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arXiv
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| Format: | Preprint |
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2024
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| _version_ | 1866911861125939200 |
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| author | Khezr, Peyman Mohan, Vijay Page, Lionel |
| author_facet | Khezr, Peyman Mohan, Vijay Page, Lionel |
| contents | This paper examines knapsack auctions as a method to solve the knapsack problem with incomplete information, where object values are private and sizes are public. We analyze three auction types-uniform price (UP), discriminatory price (DP), and generalized second price (GSP)-to determine efficient resource allocation in these settings. Using a Greedy algorithm for allocating objects, we analyze bidding behavior, revenue and efficiency of these three auctions using theory, lab experiments, and AI-enriched simulations. Our results suggest that the uniform-price auction has the highest level of truthful bidding and efficiency while the discriminatory price and the generalized second-price auctions are superior in terms of revenue generation. This study not only deepens the understanding of auction-based approaches to NP-hard problems but also provides practical insights for market design. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2403_07928 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | Strategic Bidding in Knapsack Auctions Khezr, Peyman Mohan, Vijay Page, Lionel Computer Science and Game Theory Theoretical Economics This paper examines knapsack auctions as a method to solve the knapsack problem with incomplete information, where object values are private and sizes are public. We analyze three auction types-uniform price (UP), discriminatory price (DP), and generalized second price (GSP)-to determine efficient resource allocation in these settings. Using a Greedy algorithm for allocating objects, we analyze bidding behavior, revenue and efficiency of these three auctions using theory, lab experiments, and AI-enriched simulations. Our results suggest that the uniform-price auction has the highest level of truthful bidding and efficiency while the discriminatory price and the generalized second-price auctions are superior in terms of revenue generation. This study not only deepens the understanding of auction-based approaches to NP-hard problems but also provides practical insights for market design. |
| title | Strategic Bidding in Knapsack Auctions |
| topic | Computer Science and Game Theory Theoretical Economics |
| url | https://arxiv.org/abs/2403.07928 |