Auction Analysis by Normal Form Game Approximation

Auctions are pervasive in todaypsilas society and provide a variety of real markets. This article facilitates a strategic choice between a set of available trading strategies by introducing a methodology to approximate heuristic payoff tables by normal form games. An example from the auction domain is transformed by this means and an evolutionary game theory analysis is applied subsequently. The information loss in the normal form approximation is shown to be reasonably small such that the concise normal form representation can be leveraged in order to make strategic decisions in auctions. In particular, a mix of trading strategies that guarantees a certain profit is computed and further applications are indicated.

[1]  Tomas Klos,et al.  Evolutionary Dynamics for Designing Multi-Period Auctions (Short Paper) , 2008 .

[2]  S. Parsons,et al.  bluffer ’ s guide to auctions , 2004 .

[3]  M. Hirsch,et al.  Differential Equations, Dynamical Systems, and an Introduction to Chaos , 2003 .

[4]  Steven R. Williams,et al.  The Rate of Convergence to Efficiency in the Buyer's Bid Double Auction as the Market Becomes Large , 1989 .

[5]  John Dickhaut,et al.  Price Formation in Double Auctions , 2001, E-Commerce Agents.

[6]  Simon Parsons,et al.  A novel method for automatic strategy acquisition in N-player non-zero-sum games , 2006, AAMAS '06.

[7]  D. Cliff.  Minimal-Intelligence Agents for Bargaining Behaviors in Market-Based Environments , 1997 .

[8]  G. Tesauro,et al.  Analyzing Complex Strategic Interactions in Multi-Agent Systems , 2002 .

[9]  A. Roth,et al.  Predicting How People Play Games: Reinforcement Learning in Experimental Games with Unique, Mixed Strategy Equilibria , 1998 .

[10]  S. Parsons,et al.  Everything you wanted to know about double auctions , but were afraid to ( bid or ) ask , 2006 .

[11]  Simon Parsons,et al.  What evolutionary game theory tells us about multiagent learning , 2007, Artif. Intell..

[12]  Leigh Tesfatsion,et al.  Market power and efficiency in a computational electricity market with discriminatory double-auction pricing , 2001, IEEE Trans. Evol. Comput..

[13]  Tim Roughgarden,et al.  The price of anarchy is independent of the network topology , 2002, STOC '02.