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Documents authored by Babaioff, Moshe

Document
DOI: 10.4230/LIPIcs.ITCS.2023.9
Making Auctions Robust to Aftermarkets

Authors: Moshe Babaioff, Nicole Immorlica, Yingkai Li, and Brendan Lucier

Published in: LIPIcs, Volume 251, 14th Innovations in Theoretical Computer Science Conference (ITCS 2023)

Abstract
A prevalent assumption in auction theory is that the auctioneer has full control over the market and that the allocation she dictates is final. In practice, however, agents might be able to resell acquired items in an aftermarket. A prominent example is the market for carbon emission allowances. These allowances are commonly allocated by the government using uniform-price auctions, and firms can typically trade these allowances among themselves in an aftermarket that may not be fully under the auctioneer’s control. While the uniform-price auction is approximately efficient in isolation, we show that speculation and resale in aftermarkets might result in a significant welfare loss. Motivated by this issue, we consider three approaches, each ensuring high equilibrium welfare in the combined market. The first approach is to adopt smooth auctions such as discriminatory auctions. This approach is robust to correlated valuations and to participants acquiring information about others' types. However, discriminatory auctions have several downsides, notably that of charging bidders different prices for identical items, resulting in fairness concerns that make the format unpopular. Two other approaches we suggest are either using posted-pricing mechanisms, or using uniform-price auctions with anonymous reserves. We show that when using balanced prices, both these approaches ensure high equilibrium welfare in the combined market. The latter also inherits many of the benefits from uniform-price auctions such as price discovery, and can be introduced with a minor modification to auctions currently in use to sell carbon emission allowances.
Cite as

Moshe Babaioff, Nicole Immorlica, Yingkai Li, and Brendan Lucier. Making Auctions Robust to Aftermarkets. In 14th Innovations in Theoretical Computer Science Conference (ITCS 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 251, pp. 9:1-9:23, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2023)

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@InProceedings{babaioff_et_al:LIPIcs.ITCS.2023.9,
  author =	{Babaioff, Moshe and Immorlica, Nicole and Li, Yingkai and Lucier, Brendan},
  title =	{{Making Auctions Robust to Aftermarkets}},
  booktitle =	{14th Innovations in Theoretical Computer Science Conference (ITCS 2023)},
  pages =	{9:1--9:23},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-263-1},
  ISSN =	{1868-8969},
  year =	{2023},
  volume =	{251},
  editor =	{Tauman Kalai, Yael},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ITCS.2023.9},
  URN =		{urn:nbn:de:0030-drops-175122},
  doi =		{10.4230/LIPIcs.ITCS.2023.9},
  annote =	{Keywords: carbon markets, aftermarkets, price of anarchy, multi-unit auctions, posted prices}
}
Document
Extended Abstract
DOI: 10.4230/LIPIcs.ITCS.2021.84
Non-Quasi-Linear Agents in Quasi-Linear Mechanisms (Extended Abstract)

Authors: Moshe Babaioff, Richard Cole, Jason Hartline, Nicole Immorlica, and Brendan Lucier

Published in: LIPIcs, Volume 185, 12th Innovations in Theoretical Computer Science Conference (ITCS 2021)

Abstract
Mechanisms with money are commonly designed under the assumption that agents are quasi-linear, meaning they have linear disutility for spending money. We study the implications when agents with non-linear (specifically, convex) disutility for payments participate in mechanisms designed for quasi-linear agents. We first show that any mechanism that is truthful for quasi-linear buyers has a simple best response function for buyers with non-linear disutility from payments, in which each bidder simply scales down her value for each potential outcome by a fixed factor, equal to her target return on investment (ROI). We call such a strategy ROI-optimal. We prove the existence of a Nash equilibrium in which agents use ROI-optimal strategies for a general class of allocation problems. Motivated by online marketplaces, we then focus on simultaneous second-price auctions for additive bidders and show that all ROI-optimal equilibria in this setting achieve constant-factor approximations to suitable welfare and revenue benchmarks.
Cite as

Moshe Babaioff, Richard Cole, Jason Hartline, Nicole Immorlica, and Brendan Lucier. Non-Quasi-Linear Agents in Quasi-Linear Mechanisms (Extended Abstract). In 12th Innovations in Theoretical Computer Science Conference (ITCS 2021). Leibniz International Proceedings in Informatics (LIPIcs), Volume 185, p. 84:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2021)

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@InProceedings{babaioff_et_al:LIPIcs.ITCS.2021.84,
  author =	{Babaioff, Moshe and Cole, Richard and Hartline, Jason and Immorlica, Nicole and Lucier, Brendan},
  title =	{{Non-Quasi-Linear Agents in Quasi-Linear Mechanisms}},
  booktitle =	{12th Innovations in Theoretical Computer Science Conference (ITCS 2021)},
  pages =	{84:1--84:1},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-177-1},
  ISSN =	{1868-8969},
  year =	{2021},
  volume =	{185},
  editor =	{Lee, James R.},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ITCS.2021.84},
  URN =		{urn:nbn:de:0030-drops-136230},
  doi =		{10.4230/LIPIcs.ITCS.2021.84},
  annote =	{Keywords: Return on investment, Non-quasi-linear agents, Transferable Welfare, Simultaneous Second-Price Auctions}
}
Document
DOI: 10.4230/LIPIcs.ICALP.2017.134
Selling Complementary Goods: Dynamics, Efficiency and Revenue

Authors: Moshe Babaioff, Liad Blumrosen, and Noam Nisan

Published in: LIPIcs, Volume 80, 44th International Colloquium on Automata, Languages, and Programming (ICALP 2017)

Abstract
We consider a price competition between two sellers of perfect-complement goods. Each seller posts a price for the good it sells, but the demand is determined according to the sum of prices. This is a classic model by Cournot (1838), who showed that in this setting a monopoly that sells both goods is better for the society than two competing sellers. We show that non-trivial pure Nash equilibria always exist in this game. We also quantify Cournot's observation with respect to both the optimal welfare and the monopoly revenue. We then prove a series of mostly negative results regarding the convergence of best response dynamics to equilibria in such games.
Cite as

Moshe Babaioff, Liad Blumrosen, and Noam Nisan. Selling Complementary Goods: Dynamics, Efficiency and Revenue. In 44th International Colloquium on Automata, Languages, and Programming (ICALP 2017). Leibniz International Proceedings in Informatics (LIPIcs), Volume 80, pp. 134:1-134:14, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2017)

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@InProceedings{babaioff_et_al:LIPIcs.ICALP.2017.134,
  author =	{Babaioff, Moshe and Blumrosen, Liad and Nisan, Noam},
  title =	{{Selling Complementary Goods: Dynamics, Efficiency and Revenue}},
  booktitle =	{44th International Colloquium on Automata, Languages, and Programming (ICALP 2017)},
  pages =	{134:1--134:14},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-041-5},
  ISSN =	{1868-8969},
  year =	{2017},
  volume =	{80},
  editor =	{Chatzigiannakis, Ioannis and Indyk, Piotr and Kuhn, Fabian and Muscholl, Anca},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ICALP.2017.134},
  URN =		{urn:nbn:de:0030-drops-74757},
  doi =		{10.4230/LIPIcs.ICALP.2017.134},
  annote =	{Keywords: Complements, Pricing, Networks, Game Theory, Price of Stability}
}
Document
DOI: 10.4230/LIPIcs.ICALP.2016.140
Networks of Complements

Authors: Moshe Babaioff, Liad Blumrosen, and Noam Nisan

Published in: LIPIcs, Volume 55, 43rd International Colloquium on Automata, Languages, and Programming (ICALP 2016)

Abstract
We consider a network of sellers, each selling a single product, where the graph structure represents pair-wise complementarities between products. We study how the network structure affects revenue and social welfare of equilibria of the pricing game between the sellers. We prove positive and negative results, both of "Price of Anarchy" and of "Price of Stability" type, for special families of graphs (paths, cycles) as well as more general ones (trees, graphs). We describe best-reply dynamics that converge to non-trivial equilibrium in several families of graphs, and we use these dynamics to prove the existence of approximately-efficient equilibria.
Cite as

Moshe Babaioff, Liad Blumrosen, and Noam Nisan. Networks of Complements. In 43rd International Colloquium on Automata, Languages, and Programming (ICALP 2016). Leibniz International Proceedings in Informatics (LIPIcs), Volume 55, pp. 140:1-140:14, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2016)

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@InProceedings{babaioff_et_al:LIPIcs.ICALP.2016.140,
  author =	{Babaioff, Moshe and Blumrosen, Liad and Nisan, Noam},
  title =	{{Networks of Complements}},
  booktitle =	{43rd International Colloquium on Automata, Languages, and Programming (ICALP 2016)},
  pages =	{140:1--140:14},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-013-2},
  ISSN =	{1868-8969},
  year =	{2016},
  volume =	{55},
  editor =	{Chatzigiannakis, Ioannis and Mitzenmacher, Michael and Rabani, Yuval and Sangiorgi, Davide},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ICALP.2016.140},
  URN =		{urn:nbn:de:0030-drops-62849},
  doi =		{10.4230/LIPIcs.ICALP.2016.140},
  annote =	{Keywords: Complements, Pricing, Networks, Game Theory, Price of Stability}
}
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