Repeated Bidding with Dynamic Value

TL;DR

This paper studies a repeated auction setting where a buyer's valuation changes over time since last purchase, proposing an optimal bidding algorithm and analyzing the costs of simpler bidding strategies.

Contribution

It introduces an algorithm for optimal bidding in dynamic valuation repeated auctions and evaluates the trade-offs of using simplified shading policies.

Findings

Optimal bidding policy can be computed for dynamic valuations.

Limiting to shading policies incurs specific costs.

The trade-off between optimality and simplicity is characterized.

Abstract

We consider a repeated auction where the buyer's utility for an item depends on the time that elapsed since his last purchase. We present an algorithm to build the optimal bidding policy, and then, because optimal might be impractical, we discuss the cost for the buyer of limiting himself to shading policies.