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A cooperative approach to collusion in auctions

A cooperative approach to collusion in auctions A Cooperative Approach to Collusion in Auctions YORAM BACHRACH, Microsoft Research and MORTEZA ZADIMOGHADDAM, MIT and PETER KEY, Microsoft Research The elegant Vickrey Clarke Groves (VCG) mechanism is well-known for the strong properties it o €ers: dominant truth-revealing strategies, e ƒciency and weak budget-balance in quite general settings. Despite this, it su €ers from several drawbacks, prominently susceptibility to collusion. By jointly setting their bids, colluders may increase their utility by achieving lower prices for their items. The colluders can use monetary transfers to share this utility, but they must reach an agreement regarding their actions. We analyze the agreements that are likely to arise through a cooperative game theoretic approach, transforming the auction setting into a cooperative game. We examine both the setting of a multi-unit auction as well as path procurement auctions. Categories and Subject Descriptors: I.2.11 [Arti cial Intelligence]: Distributed Arti cial Intelligence ”Multiagent Systems; J.4 [Computer Applications]: Social and Behavioral Sciences ”Economics General Terms: Algorithms, Theory, Economics Additional Key Words and Phrases: Collusion, Cooperative Game Theory, Bid Rigging 1. INTRODUCTION Auctions are a commonly used mechanism for selling or allocating goods. A key problem that such mechanisms face is that bidders may not bid http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png ACM SIGecom Exchanges Association for Computing Machinery

A cooperative approach to collusion in auctions

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Publisher
Association for Computing Machinery
Copyright
Copyright © 2011 by ACM Inc.
ISSN
1551-9031
DOI
10.1145/1978721.1978726
Publisher site
See Article on Publisher Site

Abstract

A Cooperative Approach to Collusion in Auctions YORAM BACHRACH, Microsoft Research and MORTEZA ZADIMOGHADDAM, MIT and PETER KEY, Microsoft Research The elegant Vickrey Clarke Groves (VCG) mechanism is well-known for the strong properties it o €ers: dominant truth-revealing strategies, e ƒciency and weak budget-balance in quite general settings. Despite this, it su €ers from several drawbacks, prominently susceptibility to collusion. By jointly setting their bids, colluders may increase their utility by achieving lower prices for their items. The colluders can use monetary transfers to share this utility, but they must reach an agreement regarding their actions. We analyze the agreements that are likely to arise through a cooperative game theoretic approach, transforming the auction setting into a cooperative game. We examine both the setting of a multi-unit auction as well as path procurement auctions. Categories and Subject Descriptors: I.2.11 [Arti cial Intelligence]: Distributed Arti cial Intelligence ”Multiagent Systems; J.4 [Computer Applications]: Social and Behavioral Sciences ”Economics General Terms: Algorithms, Theory, Economics Additional Key Words and Phrases: Collusion, Cooperative Game Theory, Bid Rigging 1. INTRODUCTION Auctions are a commonly used mechanism for selling or allocating goods. A key problem that such mechanisms face is that bidders may not bid

Journal

ACM SIGecom ExchangesAssociation for Computing Machinery

Published: Mar 1, 2011

References