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Price manipulability in first-price auctions

Brustle, Johannes, Dütting, Paul and Sivan, Balasubramanian (2022) Price manipulability in first-price auctions. In: WWW 2022 - Proceedings of the ACM Web Conference 2022. WWW 2022 - Proceedings of the ACM Web Conference 2022. Association for Computing Machinery, Inc, New York, NY, 58 - 67. ISBN 9781450390965

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Identification Number: 10.1145/3485447.3512051

Abstract

First-price auctions have many desirable properties, including uniquely possessing some, like credibility. However, first-price auctions are also inherently non-truthful, and non-truthfulness may result in instability and inefficiencies. Given these pros and cons, we seek to quantify the extent to which first-price auctions are susceptible to manipulation. In this work we adopt a metric that was introduced in the context of bitcoin fee design markets: the percentage change in payment that can be achieved by being strategic. We study the behavior of this metric for single-unit and k-unit auction environments with n i.i.d. buyers, and seek conditions under which the percentage change tends to zero as n grows large. To the best of our knowledge, ours is the first rigorous study of the extent to which large multi-unit first price auctions are susceptible to manipulation. We provide an almost complete picture of the conditions under which they are “truthful in the large,” and exhibit some surprising boundaries.

Item Type: Book Section
Official URL: https://dl.acm.org/doi/proceedings/10.1145/3485447
Additional Information: © 2022 ACM
Divisions: Mathematics
Subjects: Q Science > QA Mathematics > QA75 Electronic computers. Computer science
Date Deposited: 25 May 2022 14:45
Last Modified: 31 Oct 2022 12:42
URI: http://eprints.lse.ac.uk/id/eprint/115200

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