CSCE 475/875
Game Day 3: Auction Day
Assigned: October 30, 2013 Game Day: November, 11, 2013
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 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. This must be done before the Game Day
starts.
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 rounds 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 are 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 ($2). 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.
Think about how you can model other teams and sabotage their bid
attempts.)
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
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 English auctions, we will conduct them verbally.
For the Japanese auctions, we will conduct them verbally as well. Each team will be given a card to signal
whether they want to exit the auction.
For the Dutch descending auctions, we will do
this online with a webpage showing the current bid. 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 paper money is yours to add to your final
tally of utility. However, utility($X) = $X.
4. After I
have collected the information on which teams will participate in a round,
before the auction starts, I will announce the starting bid and the increment/decrement
of bids. For example, for English, I
would say, "Starting bid will be at $100", and would also say,
"I will increment by $15" ... and later on during the round, if
nobody is willing to go for "$115", I will then say, "What about
$110"? and might go back up again
or reduce it further depending on the bids received.
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 |
|