What is it about?
The Price of Anarchy (PoA) is a game-theoretical concept that measures how the efficiency of a system degrades due to selfish behavior. We prove that the PoA of First Price Auctions is 1 - 1 / e^2 \approx 0.8647, closing the gap between the best known bounds [0.7430, 0.8689]. Namely, the efficiency degradation at any equilibrium is no worse than 13.53%.
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Why is it important?
First Price Auction is the most common auction format in real business. Since Vickrey's seminal work in 1961, study on its equilibria and efficiency guarantees has been the centerpiece of modern auction theory and promoted a rich literature. Our work settles a central open problem in this regard.
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This page is a summary of: First Price Auction is 1 − 1/
e
2
Efficient, Journal of the ACM, September 2023, ACM (Association for Computing Machinery),
DOI: 10.1145/3617902.
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