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Vickrey Auction

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Re: Vickrey Auction

#31

Post by n1b0m »

drc500free wrote: post #24
n1b0m wrote: post #12

Earlier quoted context omitted.

Explain it to me like I’m a 5 year old

In sealed auctions, you want to win by bidding the most. But if you win by more than $1, you could have paid less. In this version, you just bid to win and the seller lets you adjust down to that perfect "just barely winning" bid afterwards. It turns out the seller makes more by everyone bidding to win than they lose by letting the winner adjust their bid after winning. That's because the 2nd place bid ends up being…

Thank you

Re: Vickrey Auction

#32

Post by hgsgm »

papandada wrote: post #18

I posted something in the online classifieds this way. In demand but manufacturer was sold out for months. I didn't know how to price it, and I wanted to get a fair price as well as being fair to buyers. Well, kijiji buyers were not into that. No replies. Just one guy who told me it was the dumbest ad he had ever read. So, I'm still sitting here staring at those ironmaster dumbbells.

Don't obsess over the price you get for used stuff.

If you want, post for sale high, and lower the price over time until you get a sale.

Re: Vickrey Auction

#33

Post by EricButton »

matthewdgreen wrote: post #25
fidotron wrote: post #8

In Quebec we had an investigation into widespread corruption in construction ( https://en.wikipedia.org/wiki/Charbonneau_Commission ) during which the major government witness made the very strong case that thanks to the lowest-bidder-at-lowest-bid-price auction process used by municipalities you either have to be corrupt or you will go out of business. I couldn't help thinking he should have cited Vickrey at the tim…

But as the article points out, Vickrey-style auctions are vulnerable to collusion. Presumably in an area where there's already lots of corruption you're going to see plenty of this.

true. wonder if there's something like the average of the 2 best bids that would mitigate this problem. coupled with anti-corruption enforcement...

Re: Vickrey Auction

#35

Post by fidotron »

matthewdgreen wrote: post #25
fidotron wrote: post #8

In Quebec we had an investigation into widespread corruption in construction ( https://en.wikipedia.org/wiki/Charbonneau_Commission ) during which the major government witness made the very strong case that thanks to the lowest-bidder-at-lowest-bid-price auction process used by municipalities you either have to be corrupt or you will go out of business. I couldn't help thinking he should have cited Vickrey at the tim…

But as the article points out, Vickrey-style auctions are vulnerable to collusion. Presumably in an area where there's already lots of corruption you're going to see plenty of this.

Indeed, you would need carrot and stick. The point the witness made was that under the current system you could not profit without collusion. (Edit to add: and that means that all honest people end up driven out of the construction industry). At least under a Vickrey system an honest person can make a profit hypothetically proportional to the social benefit provided.

The flip side is you would have to tell people that while you're going to increase what you pay them your tolerance for collusion (and it is essentially tolerated today) will go down, and mean it.

Re: Vickrey Auction

#36

Post by crazygringo »

koube wrote: post #20

The Undercover Economist book mentions these. They're honest but they're publicly embarrassing for governments in auctions with few bidders, because sometimes there would only be two bidders, one bidding $100k and one bidding $4, so people were wondering why the winner who was bidding $100k was only paying $4 for a license. [0] The book goes on to describe the UK 3G Telecom license auction[1] and explain how it went…

If these auctions were common, it seems like it would be a ripe opportunity for arbitrage.

In a case like this if you thought the market value was $100k, someone with no interest in the license should go ahead and bid something like $60k anyways. If everybody else placed silly bids like $4 "just in case nobody else bids for real", you'll win and resell it and walk away with $40k profit.

Of course this assumes there is an actual market for the thing -- that a telecoms company really will take it off your hands for $100k.

Although if there really is only one person in the world who wants something and they would pay $100k for it... and literally nobody else has any interest in it at all... then there's a good argument to be made that it really is worth $0. Like a remote island that is utter perfection for one hermit, but of zero interest to anyone else.

Re: Vickrey Auction

#37

Post by VHRanger »

whimsicalism wrote: post #28
VHRanger wrote: post #16

Earlier quoted context omitted.

I also work in ad tech (lead the algo team in job ads). Second price auctions online are great, but they're not strategyproof. You still need a bidding strategy. For thin/small/sparse markets they simply don't work. You need a first price auction. Google definitely game their own 2nd price auction, but this is just one reason amon many they're not strategyproof.

Do advertisers even control their bid in the auction? In my experience, not fully.

My job is to write algos that optimize the bid on behalf of clients.

Most pay per click ad platforms have an API that let you set the bid.

Re: Vickrey Auction

#38

Post by crazygringo »

This is basically how eBay works for auctions.

A pair of headphones is currently bid up to $55, you place a max bid of $100, and at the end, if the final max bid among every else is $80, then you win them for $81.

Which is why I never understand complaints against eBay "snipers", who bid in the last couple seconds of an auction. If you put in your actual honest max bid, the timing simply doesn't matter.

Re: Vickrey Auction

#39

Post by Veserv »

matthewdgreen wrote: post #25
fidotron wrote: post #8

In Quebec we had an investigation into widespread corruption in construction ( https://en.wikipedia.org/wiki/Charbonneau_Commission ) during which the major government witness made the very strong case that thanks to the lowest-bidder-at-lowest-bid-price auction process used by municipalities you either have to be corrupt or you will go out of business. I couldn't help thinking he should have cited Vickrey at the tim…

But as the article points out, Vickrey-style auctions are vulnerable to collusion. Presumably in an area where there's already lots of corruption you're going to see plenty of this.

They are vulnerable to collusion in the sense that if all partys collude to decide who is going to win, then the winner bids X and the losers never put in a bid, so the pre-determined winner pays $0. In that sense, literally every auction is vulnerable to collusion. The only net downside to the Vickrey auction is that the winner still wins even if there is a defector, they would just pay more. This is in contrast to say a normal first-price auction where the winner values at $100 and the losers value at $99, so they collude to have the winner bid $1 and the colluders bid $0, but then there is a incentive for the colluders to defect and pay $2 to get the thing they value at $99. So, vulnerable to collusion in this sense is more that it is vulnerable to collusion with little to no risk of defection. However, if there are non-colluders, then the best you get is the highest bid of the non-colluders.

Re: Vickrey Auction

#40

Post by [deleted] »

hgsgm wrote: post #32
papandada wrote: post #18

I posted something in the online classifieds this way. In demand but manufacturer was sold out for months. I didn't know how to price it, and I wanted to get a fair price as well as being fair to buyers. Well, kijiji buyers were not into that. No replies. Just one guy who told me it was the dumbest ad he had ever read. So, I'm still sitting here staring at those ironmaster dumbbells.

Don't obsess over the price you get for used stuff. If you want, post for sale high, and lower the price over time until you get a sale.

[deleted]
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