Equivalence of Two-Round Auctions and Single-Round Auctions: A DSIC Perspective

In this study, the authors investigate the impact of different valuation distributions on the revenue performance of auctions. They consider two types of bidding strategies: risky bidding, where bidders take risks by overbidding to increase their chances of winning, and truthful bidding, where bidders bid their true valuations to maximize their payoffs.
The authors conduct a series of experiments using a package auction format, where multiple items are segmented into fewer packages and sold separately. They vary the distribution of valuations among bidders and analyze the impact on revenue performance. The results show that as the distribution of valuations becomes more skewed towards higher values, the revenue performance improves for both risky and truthful bidding strategies.
However, the authors also find that the incremental ratio of risky bidding decreases as the growth of θ (the parameter that measures the skewness of the valuation distribution) increases. In other words, while risky bidding can lead to higher revenue in some cases, it may not always be the most effective strategy, especially when the valuation distribution is highly skewed towards higher values.
The authors also observe that the optimal auction design varies depending on the type of valuation distribution. For example, in cases where the valuations are more evenly distributed, a combination of multiple rounds and package auctions may be more effective. However, when the valuations are highly skewed, a single-round sealed-bid auction may be more suitable.
Overall, the study highlights the importance of considering the distribution of valuations in auction design and suggests that a nuanced approach to bidding strategies can lead to higher revenue performance. By understanding the impact of different valuation distributions on auction outcomes, policymakers and practitioners can optimize their auctions for better revenue performance and more efficient resource allocation.