Heavy Tails Make Happy Buyers
Computer Science and Game Theory
2020-02-24 v1 Theoretical Economics
Applications
Abstract
In a second-price auction with i.i.d. (independent identically distributed) bidder valuations, adding bidders increases expected buyer surplus if the distribution of valuations has a sufficiently heavy right tail. While this does not imply that a bidder in an auction should prefer for more bidders to join the auction, it does imply that a bidder should prefer it in exchange for the bidder being allowed to participate in more auctions. Also, for a heavy-tailed valuation distribution, marginal expected seller revenue per added bidder remains strong even when there are already many bidders.
Cite
@article{arxiv.2002.09014,
title = {Heavy Tails Make Happy Buyers},
author = {Eric Bax},
journal= {arXiv preprint arXiv:2002.09014},
year = {2020}
}