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Designing and analyzing clock auctions
Dissertation   Open access

Designing and analyzing clock auctions

Daniel Reath Schoepflin
Doctor of Philosophy (Ph.D.), Drexel University
Sep 2023
DOI:
https://doi.org/10.17918/00001823
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Abstract

Game theory--Mathematical models Algorithmic mechanism design Auction theory Bounded rationality Clock auctions Obvious strategyproofness
In the canonical (forward) auction setting, an auctioneer faces a set of self-interested agents each competing for a service. The auctioneer must elicit the value of each agent for the service to decide which agents to serve aiming to maximize some objective, e.g., social welfare. The agents, however, can strategically misreport their private values, aiming to manipuate the auction and arrive at a more preferred outcome (e.g., acquiring the service at a lower price). The standard goal in auction design is, thus, to craft strategyproof auctions, meaning that there is no incentive for any of the agents to misreport their private information. Many of the celebrated results in auction design, notably, e.g., the Vickrey-Clarke-Groves mechanism (which is strategyproof and functions in very general settings), rely on the crucial assumption that agents are perfectly rational and always can verify their optimal truthful strategies. Empirical literature in economics has long shown that this standard assumption of "unbounded rationality'' is overly simplistic and unrealistic. There has, thus, been a recent growing literature in economics aiming to model more accurately the reasoning of "real-world'' agents, and, in parallel, a growing literature on designing practical mechanisms which are robust to these more realistic models of agent behavior. The work in this thesis adds to the literature on designing practical mechanisms by focusing on designing (deferred acceptance) clock auctions auctions, which have numerous appealing properties and which have been shown, empirically, to be more robust to the strategic behavior of "real-world'' agents. We design clock auctions in a variety of standard auction settings, namely, (i) single-parameter forward auctions; (ii) budget-constrained procurement auctions - wherein an auctioneer aims to maximize the value she can obtain by acquiring services from a group of strategic sellers; and (iii) interdependent value forward auctions - wherein the value of each buyer depends on the private information held by all of the buyers. We propose multiple clock auctions in each of these settings and analyze their performance from both the traditional computer science perspective of worst-case analysis and in the Bayesian setting, a viewpoint more traditional to the economics literature.

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