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Magazine: Features: Incentivizing Truthfulness Do Humans Play Equilibrium? Modeling Human Behavior in Computational Strategic Systems

Do Humans Play Equilibrium? Modeling Human Behavior in Computational Strategic Systems

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Tags: Algorithmic game theory, Computational pricing and auctions, Economics, Online auctions, Psychology

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Jargon

GSP
Generalized Second-Price Auction (GSP) is a non-truthful auction mechanism for multiple ranked slots. Each bidder places a single bid. The highest bidder is allocated the best slot and is charged according to the bid of the second-highest bidder, the second-highest bidder is allocated the second-best slot and is charged according to the bid of the third-highest bidder, and so on. A classic application is Google AdWords.
VCG
Vickrey-Clarke-Groves Auction (VCG) is a type of sealed-bid auction of multiple items. Every bidder submits their true valuation of the items, which is unknown to other bidders. The system assigns the items in a socially optimal manner, that is, it charges each individual according to the harm they cause to other bidders.