Robust Analysis of Auction Equilibria

TL;DR

This paper introduces a robust, worst-case analysis framework for auction equilibria, focusing on environmental and equilibrium worst cases to evaluate auction performance in terms of welfare and revenue.

Contribution

It proposes a novel worst-case analysis approach for auction equilibria, identifying a key property that determines the quality of worst-case outcomes.

Findings

Identifies a property that governs worst-case welfare and revenue outcomes.

Provides a method to analyze auctions under the most adverse environments.

The property can be refined with data and applied across multiple markets.

Abstract

Equilibria in auctions can be very difficult to analyze, beyond the symmetric environments where revenue equivalence renders the analysis straightforward. This paper takes a robust approach to evaluating the equilibria of auctions. Rather than identify the equilibria of an auction under specific environmental conditions, it considers worst-case analysis, where an auction is evaluated according to the worst environment and worst equilibrium in that environment. It identifies a non-equilibrium property of auctions that governs whether or not their worst-case equilibria are good for welfare and revenue. This property is easy to analyze, can be refined from data, and composes across markets where multiple auctions are run simultaneously.