Corruption in Auctions: Social Welfare Loss in Hybrid Multi-Unit Auctions
Andries van Beek, Ruben Brokkelkamp, Guido Sch\"afer

TL;DR
This paper analyzes how corruption by auctioneers impacts social welfare in hybrid multi-unit auctions, providing tight bounds on the price of anarchy under various corruption schemes and equilibrium assumptions.
Contribution
It introduces a model for auctioneer corruption in multi-unit auctions and derives tight bounds on the robust price of anarchy for these settings.
Findings
Bound on the robust POA of $oldsymbol{oldsymbol{ ext{γ-FPA}}}$ is tight for all γ.
No-overbidding assumptions lead to more precise POA bounds.
Almost tight bounds are established for various auction and equilibrium types.
Abstract
We initiate the study of the social welfare loss caused by corrupt auctioneers, both in single-item and multi-unit auctions. In our model, the auctioneer may collude with the winning bidders by letting them lower their bids in exchange for a (possibly bidder-dependent) fraction of the surplus. We consider different corruption schemes. In the most basic one, all winning bidders lower their bid to the highest losing bid. We show that this setting is equivalent to a -hybrid auction in which the payments are a convex combination of first-price and the second-price payments. More generally, we consider corruption schemes that can be related to -approximate first-price auctions (-FPA), where the payments recover at least a -fraction of the first-price payments. Our goal is to obtain a precise understanding of the robust price of anarchy (POA) of such…
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Taxonomy
TopicsAuction Theory and Applications · Experimental Behavioral Economics Studies · Corruption and Economic Development
