conditional equilibrium outcomes via ascending price processes
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Conditional Equilibrium Outcomes via Ascending Price Processes. Ron Lavi Industrial Engineering and Management Technion – Israel Institute of Technology. Joint work with Hu Fu and Robert Kleinberg (Computer Science, Cornell University). Combinatorial Auctions with Item Bidding. - PowerPoint PPT PresentationTRANSCRIPT
Conditional Equilibrium Outcomes via Ascending Price Processes
Joint work with Hu Fu and Robert Kleinberg (Computer Science, Cornell University)
Ron Lavi
Industrial Engineering and Management
Technion – Israel Institute of Technology
Combinatorial Auctions with Item Bidding
• A set of m indivisible items are sold by separate simultaneous single-item auctions:
auction fora cell-phone
auction fora tablet
auction fora laptop
Combinatorial Auctions with Item Bidding
• A set of m indivisible items are sold by separate simultaneous single-item auctions:
• Bidders value subsets of items (captured by a valuation function vi: 2 >0)
auction fora cell-phone
auction fora tablet
auction fora laptop
a bidder
bidbid
bid
Equilibrium of the resulting game
• Bikhchandani ’99; Hassidim, Kaplan, Nisan, Mansour ’11:model as a complete information game, and show:
THM: With first-price auctions, pure Nash eq. exists if and only if Walrasian eq. exists
Reminder: Walrasian Equilibrium (WE)
• An “allocation” S = (S1,…,Sn) is a partition of the items to the players (the sets Si are disjoint, their union is ).
• The “demand” of player i under item prices p= (p1,…,pm) is:
Di(p) = argmax S vi(S) – p(S) ( where p(S) = xS px )
• “Walrasian equilibrium” (WE): allocation S=(S1,…,Sn) and prices p= (p1,…,pm) such that Si Di(p)
• Conceptually, demonstrates the “invisible hand” principle
Three Nice Properties of WE
• The first welfare theorem: the welfare in any WE is optimal(the welfare of an allocation is i vi(Si) )
• The result of a natural ascending auction:
– start from zero prices
– raise prices of over-demanded items (given players’ demands)
– … until no item is over-demanded
THM (Gul & Stacchetti ’00, Ausubel ’06): This process terminates in a Walrasian equilibrium if valuations are “gross-substitutes”
• The second welfare theorem: the allocation with maximal welfare is supported by a WE.
A Problem: very limited existence
• Kelso & Crawford ’82: WE always exists for “gross-substitutes”
• Gul & Stacchetti ’99: gross-substitutes is the maximal such class if we want to include unit-demand valuations
• Lehman, Lehman & Nisan ’06: gross-substitutes has zero measure amongst all marginally decreasing valuations.
all valuations no complementsmarginally decreasing
gross-substitutes
Equilibrium of the resulting game
• Bikhchandani ’99; Hassidim, Kaplan, Nisan, Mansour ’11:model as a complete information game, and show:
THM: With first-price auctions, pure Nash eq. exists if and only if Walrasian eq. exists
nice if exists but very limited existence
Equilibrium of the resulting game
• Bikhchandani ’99; Hassidim, Kaplan, Nisan, Mansour ’11:model as a complete information game, and show:
THM: With first-price auctions, pure Nash eq. exists if and only if Walrasian eq. exists
nice if exists but very limited existence
THM [Christodoulou, Kovacs, Schapira ’08]: With second-price auctions, pure Nash eq. exists for all fractionally-subadditive valuations
• Which notion replaces WE when 1st-price is replaced by 2nd-price?
• What are its properties? (particularly, welfare guarantees?)
• What is a maximal existence class?
A closer look at the problematic aspect of WE
• Alternative formulation of the ascending auction [DGS’86]
– start: zero prices, empty tentative allocation
– pick a player with empty tentative allocation
– this player takes her demand; raises price of a taken item by – … until all tentative allocations equal current demands
A closer look at the problematic aspect of WE
• Alternative formulation of the ascending auction [DGS’86]
– start: zero prices, empty tentative allocation
– pick a player with empty tentative allocation
– this player takes her demand; raises price of a taken item by – … until all tentative allocations equal current demands
• Gross-substitutes: demanded items whose price does not increase continue to be demanded. Implies termination in WE:
– Since all items are always allocated
A closer look at the problematic aspect of WE
• Alternative formulation of the ascending auction [DGS’86]
– start: zero prices, empty tentative allocation
– pick a player with empty tentative allocation
– this player takes her demand; raises price of a taken item by – … until all tentative allocations equal current demands
• Gross-substitutes: demanded items whose price does not increase continue to be demanded. Implies termination in WE:
– Since all items are always allocated
• Without gross-substitutes, items whose price did not increase may be dropped (even with decreasing marginal valuations)
– Thus the end outcome need not be a WE, in fact a WE need not exist…
A natural modification to the auction
• Modification: a player cannot drop items currently assigned to her
• The “conditional demand” of player i, given the currently assignedset of items Si, under item prices p= (p1,…,pm) is:
CDi(p, Si) = argmax T \ Si vi(T|Si) – p(T)
• A modified auction:
– start: zero prices, empty tentative allocation
– pick a player with non-empty conditional demand, (this player:)
– takes her conditional demand; raises price of a taken item by – … until all conditional demands are empty
• With gross-substitutes: the same auction as before, ends in WE.
• Without gross-substitutes ???
Conditional Equilibrium (CE)Proposition: With marginally decreasing valuations the auction
always ends in a “CE”:
• “Conditional Equilibrium” (CE): allocation S=(S1,…,Sn) and prices p= (p1,…,pm) such that (1) vi(Si) > p(Si) , (2) CDi(p, Si)
• Conceptually, CE = “invisible hand” with some regulation
– If player i has to take at least her offered set Si, or nothing, at given prices, she will take Si and will not want to expand it.
• Formally, a relaxation of WE (WE CE)
Conditional Equilibrium (CE)Proposition: With marginally decreasing valuations the auction
always ends in a “CE”:
• “Conditional Equilibrium” (CE): allocation S=(S1,…,Sn) and prices p= (p1,…,pm) such that (1) vi(Si) > p(Si) , (2) CDi(p, Si)
THM: With second-price auctions, pure Nash eq. with weak no-overbidding exists if and only if CE exists
Conditional Equilibrium (CE)Proposition: With marginally decreasing valuations the auction
always ends in a “CE”:
• “Conditional Equilibrium” (CE): allocation S=(S1,…,Sn) and prices p= (p1,…,pm) such that (1) vi(Si) > p(Si) , (2) CDi(p, Si)
THM: With second-price auctions, pure Nash eq. with weak no-overbidding exists if and only if CE exists
• Which of the “nice” properties of WE continues to hold for a CE?
Welfare Theorems for CE
• First welfare theorem (relaxed version): the welfare in any CE is at least half of the optimal welfare
Corollary: Price of Anarchy of the 2nd-price auction game is 2
– extends and simplifies a result of Bhawalkar and Roughgarden ’11 for subadditive valuations
• Second welfare theorem: the allocation with maximal welfare is supported by a CE
– holds for “fractionally subadditive” valuations
Questions
• Can a CE exist when valuations exhibit a mixture of substitutes and complements? If so, what is the largest class of valuations that always admit a CE?
• Does the existence of a CE imply that the welfare-maximizing allocation is supported by a CE? In other words, does the second welfare theorem hold whenever a CE exists?
Maximal existence classes
A valuation class VCE satisfies the MaxCE requirements if:
• All unit-demand valuations belong to VCE
– (following Gul & Stacchetti ’99)
n > 1, any (v1,…,vn)(VCE)n admits a CE
• (maximality) uVCE, v1,…,vk VCE such that (v1,…,vk) does not admit a CE
Main Question: Describe a valuation class satisfying the MaxCE requirements. Is there a unique such class? (We know that one such class contains all fractionally subadditive valuations)
• Gul & Stacchetti ’99: gross-substitutes is the unique class that satisfies these conditions when considering WE instead of CE
Main Technical Results: Upper and Lower Bound
Upper Bound: Any valuation class VCE that satisfies the MaxCE requirements is contained in .
Lower Bound: There exists a valuation class VCE that satisfies the MaxCE requirements and contains VCE.
Properties of VCE :
– Contains all fractionally subadditive valuations.
– Contains non-subadditive valuations
Conjecture (with some supporting evidence in the paper): The unique set that satisfies the MaxCE requirements is .
We leave this as open problem.
CEV
CEV
Fractionally subadditive valuations
• (defined by Nisan’00 as XOS, the following def. is by Feige’06)
• Weights {T} T S, T are a fractional cover of S if:
xS , T s.t. xT T = 1
( these weights are “balanced” as in Bondareva-Shapley )
• Fractional subadditivity: S , fractional cover {T} of S,
vi(S) < T S, T T vi(T)
( the cooperative (cost) game (, vi) is totally balanced )
• Lehman et al. ’06:
marginally decreasing fractionally subadditive subadditive
Supporting prices
• {px}xS are supporting prices for vi(S) if
(1) vi(S) = xS px (2) T S, vi(T) > xT px
( {px} is in the core of the cooperative cost game (S, vi) )
THM (Bondareva-Shapley): vi is fractionally subadditive if
and only if, S , vi(S) has supporting prices.
(independently formulated by Dobzinski, Nisan, Schapira ’05)
The Flexible-Ascent auction• supporting prices for vi(S): (1) vi(S) = p(S) ; (2) T S, vi(T) > p(T)
• The Flexible-Ascent auction (Cristodoulou, Kovacs, Schapira ’08):
– start: zero prices, empty tentative allocations
– pick a player with non-empty conditional demand, (this player:)
– takes conditional demand; raises sum of prices of her items
– … until all conditional demands are empty
Proposition: For fractionally subadditive valuations, this auction terminates in a CE if prices are always set to be supporting prices
Proof:
• IR exists in every iteration by definition of supporting prices.
• Empty conditional demand at the end by definition of auction.
The Flexible-Ascent auction• supporting prices for vi(S): (1) vi(S) = p(S) ; (2) T S, vi(T) > p(T)
• The Flexible-Ascent auction (Cristodoulou, Kovacs, Schapira ’08):– start: zero prices, empty tentative allocations– pick a player with non-empty conditional demand, (this player:)– takes conditional demand; raises sum of prices of her items– … until all conditional demands are empty
Proposition: For fractionally subadditive valuations, this auction terminates in a CE if prices are always set to be supporting prices
Corollary: There always exists a CE for fractionally subadditive valuations.
• This is essentially the proof of [Christodoulou, Kovacs, Schapira ’08]
Can we continue to expand?
Upper bound
DFN (A valuation class ): A valuation if:
Properties:
• Contains all fractionally subadditive valuations (weights are a fractional cover)
• Does not contain all subadditive valuations, but contains non-subadditive valuations, for example:
CEV
CEVv
SxxSv
SSvSS }){\(
1||
1)(:1||,
0o/w,1||1
}\{ TSxS
abcabacbcabc
v3336648
Upper boundDFN (A valuation class ): A valuation if:
Properties:
• Contains all fractionally subadditive valuations (weights are a fractional cover)
• Does not contain all subadditive valuations, but contains non-subadditive valuations
Theorem: Fix any valuation class VCE that satisfies the MaxCE
requirements. Then .
In particular, there exist unit-demand valuations v1,…,vk such that (u, v1,…,vk) does not admit a CE.
CEV
CEVv
SxxSv
SSvSS }){\(
1||
1)(:1||,
0o/w,1||1
}\{ TSxS
CECE VV CE
Vu
Lower bound
DFN (A valuation class VCE): A valuation vVCE if and for and S (S), v(S) is fractionally subadditive.
Properties:
• Contains all fractionally subadditive valuations.
• Contains non-subadditive valuations
• Contained in
Theorem: There exists a valuation class VCE that satisfies the MaxCE requirements and contains VCE.
CEVv
CEV
What is the complete answer?
Conjecture: The unique set that satisfies theMaxCE requirements is
We leave this problem open. Additional evidence from the paper:
• When || < 3 hence the conjecture is true for this case.
• If and v2,…,vn are marginally decreasing then (v1,…,vn) admits a CE.
• For two players and four items, VCE is provably not the correct lower bound: we show one specific valuation that must be added.
CEV
CECE VV CE
Vv 1
Summary• With indivisible items, Walrasian eq. has very limited existence.
• Study a relaxed notion: “Conditional Equilibrium” (CE).
• For marginally decreasing valuations a CE exhibits:
– An approximate version of the first welfare theorem (in fact this holds for any CE regardless of the valuation class).
– A CE can be reached by a natural ascending auction.
– The second welfare theorem holds as well.
– In fact all this is true for fractionally subadditive valuations
• We study the complete characterization question:
– Show upper and lower bounds on a maximal existence class
– Implies: CE exists with a mixture of substitutes and complements
– We leave the complete characterization as an open problem