Wang, Zihe

Title: An Improved Welfare Guarantee for First Price Auctions

Abstract: Because equilibria in the first-price auction are notoriously difficult to compute theoretically, the first-price auction presents a daunting obstacle to classical economic analysis. In this talk, I will prove that the welfare of the first price auction in Bayes-Nash equilibrium is at least a .743-fraction of the welfare of the optimal mechanism assuming agents' values are independently distributed. The previous best bound was 1 - 1/e approx .63 using smoothness, the standard technique for reasoning about welfare of games in equilibrium.