Cited By
View all- Babaioff MDobzinski SOren S(2022)Combinatorial auctions with endowment effectGames and Economic Behavior10.1016/j.geb.2022.09.005136(255-273)Online publication date: Nov-2022
A general framework for endowment effects in combinatorial markets
Abstract
The endowment effect, coined by Nobel Laureate Richard Thaler, posits that people tend to inflate the value of items they own. Recently, Babaioff, Dobzinski and Oren [EC'18] introduced the notion of endowed valuations --- valuations that capture the endowment effect --- and studied the stability and efficiency of combinatorial markets with endowed valuations. They showed that under a specific formulation of the endowment effect, an endowed equilibrium --- market equilibrium with respect to endowed valuations --- is guaranteed to exist in markets with submodular valuations, but fails to exist under XOS valuations. We harness the endowment effect further by introducing a general framework that captures a wide range of different formulations of the endowment effect. The different formulations are (partially) ranked from weak to strong, based on a stability-preserving order. We then provide algorithms for computing endowment equilibria with high welfare for sufficiently strong endowment effects, and non-existence results for weaker ones. Among other results, we prove the existence of endowment equilibria under XOS valuations, and show that if one can pre-pack items into irrevocable bundles then an endowment equilibrium exists for arbitrary markets.
References
[1]
Babaioff, M., Dobzinski, S., and Oren, S. 2018. Combinatorial auctions with endowment effect. In Proceedings of the 2018 ACM Conference on Economics and Computation. ACM, 73--90.
[2]
Blumrosen, L. and Nisan, N. 2007. Combinatorial auctions. Algorithmic game theory 267, 300.
[3]
Christodoulou, G., Kovács, A., and Schapira, M. 2016. Bayesian combinatorial auctions. Journal of the ACM (JACM) 63, 2, 11.
[4]
Dobzinski, S., Feldman, M., Talgam-Cohen, I., and Weinstein, O. 2015. Welfare and revenue guarantees for competitive bundling equilibrium. In International Conference on Web and Internet Economics. Springer, 300--313.
[5]
Dobzinski, S., Nisan, N., and Schapira, M. 2005. Approximation algorithms for combinatorial auctions with complement-free bidders. In STOC. ACM, 610--618.
[6]
Dobzinski, S. and Schapira, M. 2006. An improved approximation algorithm for combinatorial auctions with submodular bidders. In Proceedings of the seventeenth annual ACM-SIAM symposium on Discrete algorithm. Society for Industrial and Applied Mathematics, 1064--1073.
[7]
Ezra, T., Feldman, M., and Friedler, O. 2019. A general framework for endowment effects in combinatorial markets. arXiv preprint arXiv:1903.11360.
[8]
Ezra, T., Feldman, M., and Friedler, O. 2020. A general framework for endowment effects in combinatorial markets. In EC '20: The 21st ACM Conference on Economics and Computation, Virtual Event, Hungary, July 13-17, 2020, P. Biró, J. Hartline, M. Ostrovsky, and A. D. Procaccia, Eds. ACM, 499--500.
[9]
Feldman, M., Gravin, N., and Lucier, B. 2016. Combinatorial walrasian equilibrium. SIAM Journal on Computing 45, 1, 29--48.
[10]
Feldman, M. and Lucier, B. 2014. Clearing markets via bundles. In International Symposium on Algorithmic Game Theory. Springer, 158--169.
[11]
Fu, H., Kleinberg, R., and Lavi, R. 2012. Conditional equilibrium outcomes via ascending price processes with applications to combinatorial auctions with item bidding. In Proceedings of the 13th ACM Conference on Electronic Commerce. ACM, 586--586.
[12]
Gul, F. and Stacchetti, E. 1999. Walrasian equilibrium with gross substitutes. Journal of Economic Theory 87, 1, 95--124.
[13]
Kahneman, D., Knetsch, J. L., and Thaler, R. H. 1990. Experimental tests of the endowment effect and the coase theorem. Journal of political Economy 98, 6, 1325--1348.
[14]
Kahneman, D., Knetsch, J. L., and Thaler, R. H. 1991. Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic perspectives 5, 1, 193--206.
[15]
Kelso Jr, A. S. and Crawford, V. P. 1982. Job matching, coalition formation, and gross substitutes. Econometrica: Journal of the Econometric Society, 1483--1504.
[16]
Knetsch, J. L. 1989. The endowment effect and evidence of nonreversible indifference curves. The american Economic review 79, 5, 1277--1284.
[17]
Lehmann, B., Lehmann, D., and Nisan, N. 2006. Combinatorial auctions with decreasing marginal utilities. Games and Economic Behavior 55, 2, 270--296.
[18]
List, J. A. 2003. Does market experience eliminate market anomalies? The Quarterly Journal of Economics 118, 1, 41--71.
[19]
List, J. A. 2011. Does market experience eliminate market anomalies? the case of exogenous market experience. American Economic Review 101, 3, 313--17.
[20]
Thaler, R. 1980. Toward a positive theory of consumer choice. Journal of Economic Behavior & Organization 1, 1, 39--60.
[21]
Tversky, A. and Kahneman, D. 1979. Prospect theory: An analysis of decision under risk. Econometrica.
[22]
Walras, L. 1874. Éléments d'économie politique pure; ou, Théorie de la richesse sociale. Number v. 1-2. Corbaz.
Recommendations
A General Framework for Endowment Effects in Combinatorial Markets
EC '20: Proceedings of the 21st ACM Conference on Economics and ComputationThe endowment effect, coined by Nobel Laureate Richard Thaler, posits that people tend to inflate the value of items they own. This bias has been traditionally studied mainly using experimental methodology. Recently, Babaioff, Dobzinski and Oren (2018) ...
Combinatorial Auctions with Endowment Effect
EC '18: Proceedings of the 2018 ACM Conference on Economics and ComputationWe study combinatorial auctions with bidders that exhibit endowment effect. In most of the previous work on cognitive biases in algorithmic game theory (e.g., [Kleinberg and Oren, EC'14] and its follow-ups) the focus was on analyzing the implications ...
Combinatorial walrasian equilibrium
STOC '13: Proceedings of the forty-fifth annual ACM symposium on Theory of ComputingWe study a combinatorial market design problem, where a collection of indivisible objects is to be priced and sold to potential buyers subject to equilibrium constraints. The classic solution concept for such problems is Walrasian Equilibrium (WE), ...
Comments
Information & Contributors
Information
Published In
November 2020
59 pages
EISSN:1551-9031
DOI:10.1145/3440968
- Editors:
- Inbal Talgam-Cohen,
- S. Matthew Weinberg
Copyright © 2020 Copyright is held by the owner/author(s).
Permission to make digital or hard copies of part or all of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for third-party components of this work must be honored. For all other uses, contact the Owner/Author.
Publisher
Association for Computing Machinery
New York, NY, United States
Publication History
Published: 02 December 2020
Published in SIGECOM Volume 18, Issue 2
Check for updates
Author Tags
Qualifiers
- Research-article
Contributors
Other Metrics
Bibliometrics & Citations
Bibliometrics
Article Metrics
- View Citations1Total Citations
- 56Total Downloads
- Downloads (Last 12 months)5
- Downloads (Last 6 weeks)0
Reflects downloads up to 23 Dec 2024
Other Metrics
Citations
Cited By
View all- Babaioff MDobzinski SOren S(2022)Combinatorial auctions with endowment effectGames and Economic Behavior10.1016/j.geb.2022.09.005136(255-273)Online publication date: Nov-2022
View Options
Login options
Check if you have access through your login credentials or your institution to get full access on this article.
Sign in