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Theory Workshop (Lunch) (12 March 2018)

When Mar 12, 2018
from 12:30 PM to 02:00 PM
Where Meade Room, Faculty of Economics
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Theory Workshop

Meade Room, Marshall Library Building

12 March 2018


Speaker: John Wooders (NYU)

Title: “Allocating Positions Fairly: An Auction and its Relationship to the Shapley Value”


We consider the problem of allocating heterogenous items (e.g., positions) to participants with equal claims in an incomplete information environment. We introduce a dynamic auction for solving this problem and characterize both equilibrium and maxmin (perfect) play. We show that maxmin perfect play has a natural fairness interpretation. We have two main results: (i) equilibrium play converges to maxmin perfect play as bidders become infinitely risk averse, and (ii) each bidder obtains his Shapley value when every bidder follows his maxmin perfect strategy. Hence, the equilibrium allocation converges to the Shapley value allocation as bidders become more risk averse. Together these results provide both noncooperative and decision theoretic foundations for the Shapley value in an environment with incomplete information.