CSCE 475/875
Game
Day 3: Auction Day
Assigned:
November 1, 2011 Game Day: November,
10, 2011
Introduction
On Auction Day,
students are required to participate in various rounds of auctions. Students are divided in to groups and each
group’s goal is to obtain goods through bidding. The key is to obtain goods that are important
to you with the limited amount of resources you have. The objectives of Auction Day are to learn more
in-depth various auction protocols, to learn how to manage resources to obtain
services/goods of high utility, and to learn how to observe the environment
(e.g., the behavior of other agents) to support own decision making
process.
Setup
First
of all, as we have learned in class: in auctions, the auctioneer wants to
maximize its own profit. For our game
day, I will be the auctioneer. I will
conduct the auctions based on the above principle; however, the evaluation of
your participation as bidders will not be based on my eventual profit.
Second,
each student group is a bidder (an agent).
Each will be given the same amount of paper money and a list of items. Every group thus knows the amount of paper
money initially owned by each group.
However, your valuation of each item on is only known to you.
Prior
to the start of the auction day, each team MUST provide the Game Day Monitor
their valuations of the items. To make
things interesting, here are some rules on your valuations of the items: (1) the maximum value is $300, (2) the
minimum value is $0, and (3) each team must have at least one item
corresponding to each of the following values: $230, $210, $190, $170, $150, $130,
$110, $90, $70, $50, and $30. Please
fill out the form in the Appendix and submit the paper copy of that to the Game
Day Monitor.
Note
that our auctions are private value auctions; that is, the value of an
item depends only on a group’s own preferences (the utilities). There is no re-sale value here.
Third,
we aim to have 15 round of auctions.
(Thus, use your resources well). There
will be five different auction protocols. Here we briefly describe them. (You should know which strategies to use for
which protocol and how to behave when an auction protocol is announced. You are not allowed to ask questions and the
auction process will not wait for you to figure out what to do.) IMPORTANT:
Because we aim to have 15 rounds, we will not wait for teams that slower
than the others. We will try to stick to
a strict schedule of auctions. Thus,
please be prepared.
Four, all auctions are all-pay auctions. There is a fee for each round of auction. If you sit out, then you will not be charged
with a fee.
Finally, every team is
required to win at least one auction round.
Otherwise, your game day placement will be behind all other winning
teams regardless of their utilities.
(Note: This is a game-changer as
it should cause you to think about the strategy for your game day.)
Protocol |
Description |
English Auction (first-price, open-cry) |
Each bidder is free to raise its bid.
When no bidder is willing to raise anymore, the auction ends, and the highest
bidder wins the item at the price of his/her bid. |
Japanese
Auction (first-price, open-cry, open exit) |
Same
as above but with open-exit.
Auctioneer will raise price and bidders declare whether to stay in the
auction. |
Dutch (descending)
Auction |
The
auctioneer continuously lowers the price until one of the bidders takes the
item at the current price. The winning transaction is known to all
groups. |
First-Price Sealed-Bid
Auction |
Each
bidder submits one bid without knowing the others’ bids. The highest bidder wins the item and pays
the amount of this bid. The winning
transaction is known to all groups. |
Vickrey (Second-Price Sealed-Bid) Auction |
Each
bidder submits one bid without knowing the others’ bids. The highest bidder wins, but at the price
of the second highest bid. The winning
transaction is known to all groups. |
No bidder
collusions are allowed. The auctioneer
does not lie.
Software
Support
Learning
from the Voting Day difficulties, the Soh’s Auction House now accepts bids
online.
Prior to
the start of each round, each team is required to fill out and submit a form:
Team Name: ___________
Round#: ________________
Decision: __ In
__ Out
For the
Japanese auctions, you will be asked to submit the above form every time a new
price is announced by the auctioneer.
For the
Dutch descending auctions, if you want to bid, you are required to submit:
Team Name: ___________
Round#: ________________
For the
sealed-bid auctions, you will be asked to submit the following form:
Team Name: ___________
Round#: ________________
Bid:
_________________
For the sealed-bid
auctions, if there are additional rounds of bidding due to ties, those involved
in the tie-breaking rounds will be required to submit the above form again,
with a different Round#. If the Round#
is 5, then the first tie-breaking round is 5.1, the second 5.2, and so
forth. Please follow these protocols
precisely.
Requirements
Each student
group is required to turn in three reports: pre-game strategies, mid-game
strategies, and post-game lessons learned.
Some
ideas on what should be included in the reports: your strategies for each round
of auction (are you risk-neutral or risk averse? pre-determined? adaptive to
other student groups? from the lectures?), how you divide the members of the
group to different tasks, your net utility gained for each round (e.g., if you
lose a bid, and you pay a fee, then the net utility for that round is a
negative value, the fee), the amount of money left and total net utility
gained, your observation of other student groups during the auction process
(can you figure out what they are doing?), and finally your conclusion.
Your participation on Auction Day
will be graded based on:
50% Game Day Report (pre-game and
mid-game strategies, worksheets)
50%
Auctions
The auctions will be graded based on
your in-class participation on Auction Day, and on your group’s performance.
FAQs
1. If the best offer the auctioneer
receives from the bidders is below the market price of the item being
auctioned, the item will be kept by the auctioneer and not sold. This market price is not known to the
bidders.
2. In the two “sealed bids” protocols,
if multiple groups have the same bid, then there will be another round of
bidding between those groups only, using the same protocol.
3. Left-over
money is yours to keep -- it adds to your final tally of utility. Utility($X) =
$X though.
Appendix: Independent Private Values for Auction Day
Team
Name: ____________________________________
Item |
Auction |
Valuation |
1 |
English |
|
2 |
Japanese |
|
3 |
Dutch |
|
4 |
Sealed,
First-Price |
|
5 |
Vickrey |
|
6 |
English |
|
7 |
Japanese |
|
8 |
Dutch |
|
9 |
Sealed,
First-Price |
|
10 |
Vickrey |
|
11 |
English |
|
12 |
Japanese |
|
13 |
Dutch |
|
14 |
Sealed,
First-Price |
|
15 |
Vickrey |
|