Strategic Bidding in Knapsack Auctions
<|reference_start|>Strategic Bidding in Knapsack Auctions: This paper examines knapsack auctions as a method to solve the knapsack problem with incomplete information, where object values are private and sizes are public. We analyze three auction types-uniform price (UP), discriminatory price (DP), and generalized second price (GSP)-to determine efficient resource allocation in these settings. Using a Greedy algorithm for allocating objects, we analyze bidding behavior, revenue and efficiency of these three auctions using theory, lab experiments, and AI-enriched simulations. Our results suggest that the uniform-price auction has the highest level of truthful bidding and efficiency while the discriminatory price and the generalized second-price auctions are superior in terms of revenue generation. This study not only deepens the understanding of auction-based approaches to NP-hard problems but also provides practical insights for market design.<|reference_end|>
@article{khezr2024strategic,
    title={Strategic Bidding in Knapsack Auctions},
    author={Peyman Khezr, Vijay Mohan and Lionel Page},
    journal={arXiv preprint arXiv:2403.07928},
    year={2024},
    archivePrefix={arXiv},
    eprint={2403.07928},
    primaryClass={cs.GT econ.TH}
}