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Overview

Overview. Problem: maximize profit in complex FCC auction high stakes ($billions) communication forbidden Solution: communication-free coordination coordinate demand reduction Results: nearly 50% more profit over $1.4 billion extra

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Overview

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Presentation Transcript

  1. Overview • Problem: maximize profit in complex FCC auction • high stakes ($billions) • communication forbidden • Solution: communication-free coordination • coordinate demand reduction • Results: nearly 50% more profit • over $1.4 billion extra • Algorithm: self-enforcing, robust, stable, fair, simple • related real-world strategies

  2. Maximize Profit • Multi-billion-dollar auctions • Complex rules and scenarios • 50% more profit • $1.4 billion extra • Interesting theory as well

  3. PRSDR is…

  4. Applicable toReal Auctions • Huge potential gains • Safe to try • Easy to use • Hard to break • Real bidders already seek and use related strategies • threats • strategic demand reduction • sniping (randomized) • problems with coordination

  5. Experimental Setup • Realistic FCC auction simulator • realistic, complex testbed • follows published auction rules • hundreds of goods • scores of categories • simultaneous, over 100 rounds • Realistic agents • crafted with input from AT&T’s real FCC auction bidding team • goals based on published data

  6. Algorithm Overview • Bid on everything you want • Tie-breaking creates allocation • Respect allocation; no competition • Fairing mechanism ensures reasonableness • Defectors automatically punished • Punishment removes all incentive to cheat • Punishers still earn more

  7. Per-Round Algorithm

  8. Empirical Results Per-Agent Profit Enforcement Effects Wasted Profit

  9. Analysis • Challenges conventional auction design theory • hard to thwart without tradeoffs • Studies suggest people open to these tactics • random allocation (sniping) • paying to punish cheaters • coordinating SDR • Game Theory • Prisoner’s Dilemma • Cooperate, Hedge, Defect • pure Nash equilibrium

  10. Effective, Robust, Realistic • Communication-free coordination • Much higher profits • Benefits of cooperation • Benefits of using even uncertain knowledge • Real-world functionality relies on simple assumptions: • bidders want more profit • bidders familiar with PRSDR and its benefits • bidders willing to try it risk-free

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