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Simultaneous auctions without complements are (almost) efficient

Author

Listed:
  • Feldman, Michal
  • Fu, Hu
  • Gravin, Nick
  • Lucier, Brendan

Abstract

A simultaneous item auction is a simple procedure for allocating multiple indivisible goods to a set of bidders. In a simultaneous auction, every bidder submits bids on all items simultaneously. The allocation and prices are then resolved for each item separately, based solely on the bids submitted on that item. Such procedures are similar to auctions used in practice (e.g. eBay) but are not incentive compatible. We study the efficiency of Bayesian Nash equilibrium (BNE) outcomes of simultaneous first- and second-price auctions when bidders have complement-free (a.k.a. subadditive) valuations. We show that the expected social welfare of any BNE is at least 12 of the optimal social welfare in the case of first-price auctions, and at least 14 in the case of second-price auctions.

Suggested Citation

  • Feldman, Michal & Fu, Hu & Gravin, Nick & Lucier, Brendan, 2020. "Simultaneous auctions without complements are (almost) efficient," Games and Economic Behavior, Elsevier, vol. 123(C), pages 327-341.
    • Handle: RePEc:eee:gamebe:v:123:y:2020:i:c:p:327-341
    DOI: 10.1016/j.geb.2015.11.009
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    References listed on IDEAS

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    1. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
    2. Simon, Leo K & Zame, William R, 1990. "Discontinuous Games and Endogenous Sharing Rules," Econometrica, Econometric Society, vol. 58(4), pages 861-872, July.
    3. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    4. Lehmann, Benny & Lehmann, Daniel & Nisan, Noam, 2006. "Combinatorial auctions with decreasing marginal utilities," Games and Economic Behavior, Elsevier, vol. 55(2), pages 270-296, May.
    5. Bikhchandani, Sushil, 1999. "Auctions of Heterogeneous Objects," Games and Economic Behavior, Elsevier, vol. 26(2), pages 193-220, January.
    6. Unknown, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," Department of Economics, Working Paper Series qt8w16v26k, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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    Cited by:

    1. Wanchang Zhang, 2022. "Auctioning Multiple Goods without Priors," Papers 2204.13726, arXiv.org.

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    More about this item

    Keywords

    Auctions; Allocative efficiency; Cost-benefit analysis noncooperative games asymmetric and private information; Mechanism design;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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