Fans Economy and All-Pay Auctions with Proportional Allocations

Authors

  • Pingzhong Tang Tsinghua University
  • Yulong Zeng Tsinghua University
  • Song Zuo Tsinghua University

DOI:

https://doi.org/10.1609/aaai.v31i1.10578

Keywords:

fans ecnomomy, all-pay auction with proportional allocation, pure Nash-Equilibrium

Abstract

In this paper, we analyze an emerging economic form, called fans economy, in which a fan donates money to the host and gets allocated proportional to the amount of his donation (normalized by the overall amount of donation). Fans economy is the major way live streaming apps monetize and includes a number of popular economic forms ranging from crowdfunding to mutual fund. We propose an auction game, coined all-pay auctions with proportional allocation (APAPA), to model the fans economy and analyze the auction from the perspective of revenue. Comparing to the standard all-pay auction, which normally has no pure Nash-Equilibrium in the complete information setting, we solve the pure Nash-Equilibrium of the APAPA in closed form and prove its uniqueness. Motivated by practical concerns, we then analyze the case where APAPA is equipped with a reserve and show that there might be multiple equilibria in this case. We give an efficient algorithm to compute all equilibria in this case. For either case, with or without reserve, we show that APAPA always extracts revenue that 2-approximates the second-highest valuation. Furthermore, we conduct experiments to show how revenue changes with respect to different reserves.

Downloads

Published

2017-02-10

How to Cite

Tang, P., Zeng, Y., & Zuo, S. (2017). Fans Economy and All-Pay Auctions with Proportional Allocations. Proceedings of the AAAI Conference on Artificial Intelligence, 31(1). https://doi.org/10.1609/aaai.v31i1.10578

Issue

Section

AAAI Technical Track: Game Theory and Economic Paradigms