- Keywords: Auctions, Mechanism Design, Multi-Agent, Fictitious Play
- TL;DR: We propose a multi-agent learning approach to designing all-pay auctions, which works even in settings where computing the Nash equilibrium bidding strategies is intractable.
- Abstract: We propose a multi-agent learning approach for designing crowdsourcing contests and all-pay auctions. Prizes in contests incentivise contestants to expend effort on their entries, with different prize allocations resulting in different incentives and bidding behaviors. In contrast to auctions designed manually by economists, our method searches the possible design space using a simulation of the multi-agent learning process, and can thus handle settings where a game-theoretic equilibrium analysis is not tractable. Our method simulates agent learning in contests and evaluates the utility of the resulting outcome for the auctioneer. Given a large contest design space, we assess through simulation many possible contest designs within the space, and fit a neural network to predict outcomes for previously untested contest designs. Finally, we apply mirror descent to optimize the design so as to achieve more desirable outcomes. Our empirical analysis shows our approach closely matches the optimal outcomes in settings where the equilibrium is known, and can produce high quality designs in settings where the equilibrium strategies are not solvable analytically.