nep-des New Economics Papers
on Economic Design
Issue of 2021‒11‒22
two papers chosen by
Guillaume Haeringer, Baruch College and Alex Teytelboym, University of Oxford

  1. Learning New Auction Format by Bidders in Internet Display Ad Auctions By Shumpei Goke; Gabriel Y. Weintraub; Ralph Mastromonaco; Sam Seljan
  2. Strategy-proofness of the unanimity with status-quo rule over restricted domains By Sarvesh Bandhu; Bishwajyoti Mondal; Anup Pramanik

  1. By: Shumpei Goke; Gabriel Y. Weintraub; Ralph Mastromonaco; Sam Seljan
    Abstract: We study actual bidding behavior when a new auction format gets introduced into the marketplace. More specifically, we investigate this question using a novel data set on internet display ad auctions that exploits a staggered adoption by different publishers (sellers) of first-price auctions (FPAs), in place for the traditional second-price auctions (SPAs). Event study regression estimates indicate a significant jump, immediately after the auction format change, in revenue per sold impression (price) of the treated publishers relative to that of control publishers, ranging from 35% to 75% of pre-treatment price levels of the treated group. Further, we observe that in later auction format changes the lift in price relative to SPAs dissipates over time, reminiscent of the celebrated revenue equivalence theorem. We take this as evidence of initially insufficient bid shading after the format change rather than an immediate shift to a new Bayesian Nash equilibrium. Prices then went down as bidders learned to shade their bids. We also show that bidders sophistication impacted their response to the auction format change. Our work constitutes one of the first field studies on bidders' responses to auction format changes, providing an important complement to theoretical model predictions. As such, it provides valuable information to auction designers when considering the implementation of different formats.
    Date: 2021–10
  2. By: Sarvesh Bandhu (IIM, Bangalore); Bishwajyoti Mondal (Department Of Economics, Shiv Nadar University); Anup Pramanik (Department Of Economics, Shiv Nadar University)
    Abstract: In this paper we provide a complete characterization of preference domains on which the Unanimity with Status-quo rule is strategy-proof. Further, we introduce a notion of "conflicting preference domains" and show that the Unanimity with Status- quo rule defined over these domains is strategy-proof.
    Keywords: Voting, Strategy-proofness, Unanimity with status-quo rules, Conflicting preference domains.
    JEL: D71
    Date: 2021–11–11

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