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Designing Bidding Strategies

Designing Bidding Strategies. Dmytro Tykhonov. Seller. Buyer. Counter-offer?. Price: €500,000. buyer. Genius. Strategies. Preferences. seller. Opponent Preferences?. Partially shared. Open. Closed. Outcome Space. Price: €500,000. Pareto frontier. Price: €300,000.

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Designing Bidding Strategies

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  1. Designing Bidding Strategies Dmytro Tykhonov Seller Buyer Counter-offer? Price: €500,000

  2. buyer Genius Strategies Preferences seller

  3. Opponent Preferences? Partially shared Open Closed

  4. Outcome Space Price: €500,000 Pareto frontier Price: €300,000 Utility of Opponent Price: €350,000 My Utility

  5. Fundamental Problem of Negotiation Learn opponent’s preferences Agreement Utility of Opponent Utility of Opponent Adapt strategy My Utility My Utility

  6. Predictable preferences Most people prefer to have more rather than less money. Monotonic preference Logarithmic curve for money Unpredictable preferences I like blue more than red, you like red more than blue. Varies from person to person Not quite as well-behaved Learn opponent’s preferences Predictable versus Unpredictable Preferences utility utility blue money green … red • Peugeot > Ford • Swim > Cycle Ride • Higher > Lower Grade • Less > More Work

  7. Learn opponent’s preferences Negotiation moves by Opponent Learning Model of Opponent Preferences Hypotheses Utility of Opponent Utility My Utility delivery date

  8. Adapt strategy Nice Matching Strategy Next bid on the Pareto Pareto efficient frontier Mirrored bid Utility of Opponent matches My Utility

  9. Adapt strategy Response to a selfish move Pareto efficient frontier Next bid on the Pareto Utility of Opponent matches My Utility

  10. Human vs Computer Negotiations

  11. GENIUS

  12. Future Work • Explanation of bidding advice: • here is a trade-off • signaling (tit-for-tat) • Multi-party negotiation • Improving the strategy • Competition of negotiating agents in GENIUS

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