Expressiveness and robustness of first-price position auctions

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Expressiveness and robustness of first-price position auctions

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Title: Expressiveness and robustness of first-price position auctions
Author: Dütting, Paul; Fischer, Felix; Parkes, David C.

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Citation: Paul Duetting, Felix A. Fischer, and David Parkes. 2015. Expressiveness and Robustness of First-Price Position Auctions. In Proceedings of the 15th ACM Conference on Economics and Computation, June 8-12, 2014, Stanford, CA, 57-74. New York: Association for Computing Machinery.
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Abstract: Since economic mechanisms are often applied to very different instances of the same problem, it is desirable to identify mechanisms that work well in a wide range of circumstances. We pursue this goal for a position auction setting and specifically seek mechanisms that guarantee good outcomes under both complete and incomplete information. A variant of the generalized first-price mechanism with multi-dimensional bids turns out to be the only standard mechanism able to achieve this goal, even when types are one-dimensional. The fact that expressiveness beyond the type space is both necessary and sufficient for this kind of robustness provides an interesting counterpoint to previous work on position auctions that has highlighted the benefits of simplicity. From a technical perspective our results are interesting because they establish equilibrium existence for a multi-dimensional bid space, where standard techniques break down. The structure of the equilibrium bids moreover provides an intuitive explanation for why first-price payments may be able to support equilibria in a wider range of circumstances than second-price payments.
Published Version: doi:10.1145/2600057.2602846
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:33009591
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