Do time-varying auctions break revenue equivalence?
Time-Varyingness in Auction Breaks Revenue Equivalence
This paper demonstrates that in time-varying auctions where the value of items fluctuates, the common economic theory of "revenue equivalence" between different auction types breaks down. This happens because in first-price auctions, bidders need to constantly learn and adapt their bidding strategies to the changing values, leading to different outcomes compared to auctions with fixed values.
For developers of LLM-based multi-agent systems, this highlights a crucial point: LLMs trained on static environments might not perform optimally in dynamic settings where they need to adapt to evolving information. This is especially relevant for multi-agent systems involving negotiation or resource allocation, where LLMs acting as agents need to learn and adapt their strategies in response to other agents and changing circumstances.