Auction Formats that Prevent Seller Manipulation Through Shill Bidding

แนวคิดหลัก

This paper characterizes auction formats that are "shill-proof" in the sense that a profit-maximizing seller has no incentive to submit any shill bids.

บทคัดย่อ

The key insights from this paper are:
Strongly Shill-Proof Auctions:

The Dutch auction (with a suitable reserve price) is the unique optimal and strongly shill-proof auction format.
Any other auction format besides the Dutch auction will allow the seller to profitably shill bid in some cases, even with full knowledge of bidders' valuations.
Weakly Shill-Proof and Efficient Auctions:

The Dutch auction (with no reserve) is the unique prior-independent auction that is both efficient and weakly shill-proof.
Any efficient and weakly shill-proof auction must conclude with a Dutch auction when all bidders' valuations fall below the monopoly price.
Weakly Shill-Proof and Strategy-Proof Optimal Auctions:

There is a multiplicity of strategy-proof, weakly shill-proof, and optimal auctions.
However, any optimal auction can satisfy at most two properties in the set {static, strategy-proof, weakly shill-proof}.
The paper provides a comprehensive theory of shill-proof auction design, highlighting the key role of the Dutch auction format in achieving shill-proofness.

สถิติ

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คำพูด

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ข้อมูลเชิงลึกที่สำคัญจาก

Shill-Proof Auctions

by Andrew Komo,... ที่ arxiv.org 04-03-2024

https://arxiv.org/pdf/2404.00475.pdf

สอบถามเพิ่มเติม

How might the results change if we consider auctions with correlated or interdependent values rather than independent private values?

In the context of auctions with correlated or interdependent values, the results of the study on shill-proof auctions may change significantly. When values are correlated, bidders may have more information about each other's valuations, leading to potential strategic interactions that differ from the independent private values setting.

Impact on Shill-Proofness:

Correlated values could affect the shill-proofness of auctions. With correlated values, shill bidders may have more opportunities to strategically influence the auction outcome by leveraging their knowledge of other bidders' valuations. This could make it more challenging to design auctions that are shill-proof.

Optimal Auction Design:

The optimal auction format for correlated values may differ from that for independent private values. Auctions that are optimal in the presence of correlated values may require different mechanisms to deter shill bidding effectively.

Equilibrium Strategies:

In auctions with correlated values, bidders may need to adjust their equilibrium strategies to account for the interdependencies among valuations. This could impact the stability and efficiency of the auction outcomes.

Information Revelation:

Correlated values may lead to more information revelation during the auction, as bidders may infer each other's valuations based on their own. This could influence the effectiveness of shill-proof mechanisms.

What are the implications of shill-proof auction design for real-world auction platforms that face shill bidding concerns?

The implications of shill-proof auction design for real-world auction platforms facing shill bidding concerns are significant and can have several practical implications:

Trust and Credibility:

Implementing shill-proof auction designs can enhance trust and credibility among participants in the auction platform. It signals a commitment to fair and transparent practices, which can attract more bidders and increase participation.

Fair Competition:

Shill-proof auctions ensure fair competition by preventing manipulative practices that distort prices and outcomes. This fosters a level playing field for all bidders, promoting a more efficient and competitive auction environment.

Enhanced Efficiency:

Shill-proof auction designs can lead to more efficient outcomes by reducing the impact of fraudulent bidding activities. This can result in better price discovery, improved allocation of resources, and increased overall efficiency in the auction process.

Regulatory Compliance:

Adhering to shill-proof auction designs can help auction platforms comply with regulatory requirements related to fair trading practices and consumer protection. It demonstrates a commitment to ethical conduct and integrity in auctions.

Risk Mitigation:

Shill-proof auction mechanisms help mitigate the risks associated with shill bidding, such as inflated prices, misleading information, and potential legal repercussions. By implementing robust anti-shilling measures, auction platforms can safeguard against fraudulent activities.

How could the insights from this paper be extended to multi-item auction settings where the seller may have incentives to shill bid?

Extending the insights from the paper to multi-item auction settings where the seller may have incentives to shill bid involves considering the complexities of multiple items and strategic interactions among bidders and the seller. Here are some ways to apply the insights:

Shill-Proof Mechanisms:

Develop shill-proof mechanisms that account for multiple items being auctioned simultaneously. Design auction formats that discourage shill bidding across all items and ensure fair outcomes for all bidders.

Optimal Auction Design:

Explore optimal auction designs for multi-item settings that balance revenue maximization for the seller with efficiency and fairness for the bidders. Consider how shill-proofness can be maintained while auctioning multiple items.

Information Disclosure:

Analyze how information disclosure and bidding strategies in multi-item auctions can impact the seller's incentives to shill bid. Develop strategies to mitigate the seller's incentives to manipulate prices across different items.

Dynamic Pricing:

Consider dynamic pricing strategies in multi-item auctions to prevent shill bidding and ensure competitive pricing. Implement mechanisms that adjust prices based on bidding behavior and market conditions to deter fraudulent activities.

Regulatory Compliance:

Ensure that the insights and auction designs comply with regulatory requirements for multi-item auctions. Address any specific challenges related to shill bidding in complex auction environments and implement measures to maintain integrity and transparency.