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Characterizing the Incentive Compatible and Pareto Optimal Efficiency Space for Two Players, k Items, Public Budget and Quasilinear Utilities

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  • Anat Lerner

    (Department of Mathematics and Computer Science, The Open University of Israel, 1 University Road, Raanana 4353701, Israel)

  • Rica Gonen

    (Department of Management and Economics, The Open University of Israel, 1 University Road, Raanana 4353701, Israel)

Abstract

We characterize the efficiency space of deterministic, dominant-strategy incentive compatible, individually rational and Pareto-optimal combinatorial auctions in a model with two players and k nonidentical items. We examine a model with multidimensional types, private values and quasilinear preferences for the players with one relaxation: one of the players is subject to a publicly known budget constraint. We show that if it is publicly known that the valuation for the largest bundle is less than the budget for at least one of the players, then Vickrey-Clarke-Groves (VCG) uniquely fulfills the basic properties of being deterministic, dominant-strategy incentive compatible, individually rational and Pareto optimal. Our characterization of the efficient space for deterministic budget constrained combinatorial auctions is similar in spirit to that of Maskin 2000 for Bayesian single-item constrained efficiency auctions and comparable with Ausubel and Milgrom 2002 for non-constrained combinatorial auctions.

Suggested Citation

  • Anat Lerner & Rica Gonen, 2014. "Characterizing the Incentive Compatible and Pareto Optimal Efficiency Space for Two Players, k Items, Public Budget and Quasilinear Utilities," Games, MDPI, vol. 5(2), pages 1-19, April.
    • Handle: RePEc:gam:jgames:v:5:y:2014:i:2:p:97-115:d:35676
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    References listed on IDEAS

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    2. Lerner Anat & Gonen Rica, 2013. "Dictatorial Mechanisms in Constrained Combinatorial Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 1-18, June.
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    10. Rica Gonen & Anat Lerner, 2013. "The Incompatibility of Pareto Optimality and Dominant-Strategy Incentive Compatibility in Sufficiently-Anonymous Budget-Constrained Quasilinear Settings," Games, MDPI, vol. 4(4), pages 1-21, November.
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    Cited by:

    1. Anat Lerner & Rica Gonen, 2016. "Efficient Constrained Combinatorial Auctions," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(03), pages 1-10, September.

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