Separation between second price auctions with personalized reserves and the revenue optimal auction

Abstract

What fraction of the single item n buyers setting's expected optimal revenue (MyeRev) can the second price auction with reserves achieve? In the special case where the buyers' valuation distributions are all drawn i.i.d. and the distributions satisfy the regularity condition, the second price auction with an anonymous reserve (ASP) is the optimal auction itself. As the setting gets more complex, there are established upper bounds on the fraction of MyeRev that ASP can achieve. On the contrary, no such upper bounds are known for the fraction of MyeRev achievable by the second price auction with eager personalized reserves (ESP). In particular, no separation was earlier known between ESP's revenue and MyeRev even in the most general setting of non-identical product distributions that don't satisfy the regularity condition. In this paper we establish the first separation results for ESP: we show that even in the case of distributions drawn i.i.d., but not necessarily satisfying the regularity condition, the ESP cannot achieve more than a 0.778 fraction of MyeRev in general. Combined with the result from Correa et al. (2017) that ESP can achieve at least a 0.745 fraction of MyeRev, this nearly bridges the gap between upper and lower bounds on ESP's approximation factor. * Google Research. willma@google.com. † Google Research. balusivan@google.com.

Tight Revenue Gaps among Multi-Unit Mechanisms

“…Beyond the Anonymous Reserve mechanism, other simple auctions with the more powerful personalized reserves are also extensively studied [7,28,35].…”