Lookahead Auctions with Pooling

TL;DR

This paper introduces lookahead with pooling (LAP), an extension of the lookahead auction that pools values to improve revenue guarantees for independent buyers, while maintaining simplicity and fairness.

Contribution

It proposes LAP, which enhances revenue approximation from 1/2 to 4/7 for independent buyers by pooling values during ascending-price stages.

Findings

LAP improves revenue guarantees for independent buyers.

LAP cannot surpass 1/2 approximation for correlated priors.

Pooling maintains simplicity and fairness of the original LA auction.

Abstract

A Lookahead Auction (LA), introduced by Ronen, is an auction format for the sale of a single item among multiple buyers, which is considered simpler and more fair than the optimal auction. Indeed, it anonymously selects a provisional winner by a symmetric ascending-price process, and only then uses a personalized posted price. A LA auction extracts at least 1/2 of the optimal revenue, even under a correlated value distribution. This bound is tight, even for 2 buyers with independent values. We introduce a natural extension of LA, called lookahead with pooling (LAP). A LAP auction proceeds as LA, with one difference: it allows the seller to pool together a range of values during the ascending-price stage, and treat them the same; thus, it preserves the simplicity and fairness of LA. Our main result is that this simple pooling operation improves the revenue guarantees for independent buyers from 1/2 to 4/7 of the optimal revenue. We also give a complementary negative result, showing that for arbitrary correlated priors LAP cannot do better than 1/2 approximation.