Impersonation Strategies in Auctions

A common approach to analyzing repeated auctions, such as sponsored search auctions, is to treat them as complete information games, because it is assumed that, over time, players learn each other’s types. This overlooks the possibility that players may impersonate another type. In this paper, we show that many standard auctions, including the Kelly mechanism, generalized second price auctions, and core-selecting auctions, have profitable impersonations. We define a notion of impersonation-proofness for the process by which players learn about each other’s type together with the auction mechanism and associated complete information game and give several examples.