Publications
Publications
- March 2008
- Applied Economics Research Bulletin
Testing a Purportedly More Learnable Auction Mechanism
Abstract
We describe an auction mechanism in the class of Groves mechanisms that has received attention in the computer science literature because of its theoretical property of being more "learnable" than the standard second price auction mechanism. We bring this mechanism, which we refer to as the "clamped second price auction mechanism," into the laboratory to determine whether it helps human subjects learn to play their optimal strategy faster than the standard second price auction mechanism. Contrary to earlier results within computer science using simulated reinforcement learning agents, we find that both in settings where subjects are given complete information about auction payoff rules and in settings where they are given no information about auction payoff rules, subjects converge on playing their optimal strategy significantly faster in sequential auctions conducted with a standard second price auction mechanism than with a clamped second price auction mechanism. We conclude that while it is important for mechanism designers to think more about creating learnable mechanisms, the clamped second price auction mechanism in fact produces slower learning in human subjects than the standard second price auction mechanism. Our results also serve to highlight differences in behavior between simulated agents and human bidders that mechanism designers should take into account before placing too much faith in simulations to test the performance of mechanisms intended for human use.
Keywords
Citation
Milkman, Katherine L., James Burns, David Parkes, Gregory M. Barron, and Kagan Tumer. "Testing a Purportedly More Learnable Auction Mechanism." Special Issue on Theoretical, Empirical and Experimental Research on Auctions. Applied Economics Research Bulletin 2 (March 2008): 106–141. (Earlier version distributed as Harvard Business School Working Paper 08-064.)