Audited Auctions: Addressing Externalities in One-sided Mechanisms
About
We consider the form of externalities where some agent(s) have preferences over the outcome of a mechanism, and their preferences cannot be known before the mechanism is run. Often, this problem is solved by an auctioneer inserting dummy bids to represent the externalities. However, there may be ethical, trust, or power issues with delegating the determination of one's values to a central entity. To address this, we consider auctions where the auctioneer has the power to (randomly) audit bidders to learn their externality, and impose penalties accordingly. Our objective is to maximize total welfare, i.e. the sum of individual value and externalities. We show how penalty functions induce thresholds of participation, and prove analytically that welfare optimal participation thresholds in the i.i.d. setting with no competition are linear.
Speakers
Tejovan Parker
Tejovan Parker is a third-year PhD student at Boston University's Faculty of Computing and Data Sciences. Previously, he studied Mechanical and Global Engineering at the University of Colorado Boulder. He is interested in better management of social, political, and economic systems through mathematical and algorithmic methods.
Gabe Maayan
Gabe is a third-year PhD student at Boston University's Faculty of Computing and Data Sciences. Previously, he worked on a variety of projects at the MITRE Corporation and received his Bachelor of Science in Computer Science at Rensselaer Polytechnic Institute. His research interests are in Complexity Science, Complex Systems Analysis and Modeling, and Agent-Based Modeling.