Strategy-proofness and Efficiency with Nonquasi-linear Preferences: A Characterization of Minimum Price Walrasian Rule
AbstractWe consider the problems of allocating several heterogeneous objects owned by governments to a group of agents and how much agents should pay. Each agent receives at most one object and has nonquasi-linear preferences. Nonquasi-linear preferences describe environments in which large-scale payments influence agents' abilities to utilize objects or derive benefits from them. The "minimum price Walrasian (MPW) rule" is the rule that assigns a minimum price Walrasian equilibrium allocation to each preference profile. We establish that the MPW rule is the unique rule that satisfies the desirable properties of strategy-proofness, Pareto-efficiency, individual rationality, and nonnegative payment on the domain that includes nonquasi-linear preferences. This result does not only recommend the MPW rule based on those desirable properties, but also suggest that governments cannot improve upon the MPW rule once they consider them essential. Since the outcome of the MPW rule coincides with that of the simultaneous ascending (SA) auction, our result explains the pervasive use of the SA auction.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0852.
Date of creation: Aug 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-08-23 (All new papers)
- NEP-GTH-2012-08-23 (Game Theory)
- NEP-MIC-2012-08-23 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- de Vries, Sven & Schummer, James & Vohra, Rakesh V., 2007.
"On ascending Vickrey auctions for heterogeneous objects,"
Journal of Economic Theory,
Elsevier, vol. 132(1), pages 95-118, January.
- Sven de Vries & James Schummer, 2005. "On Ascending Vickrey Auctions for Heterogeneous Objects," 2005 Meeting Papers 389, Society for Economic Dynamics.
- Tadenuma, Koichi & Thomson, William, 1991. "No-Envy and Consistency in Economies with Indivisible Goods," Econometrica, Econometric Society, vol. 59(6), pages 1755-67, November.
- Alcalde, Jose & Barbera, Salvador, 1994.
"Top Dominance and the Possibility of Strategy-Proof Stable Solutions to Matching Problems,"
Springer, vol. 4(3), pages 417-35, May.
- Alcalde, J. & Barberà, S., 1992. "Top Dominance and the Possibility of Strategy-Proof Stable Solutions to Matching Problems," UFAE and IAE Working Papers 196.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
- Toyotaka Sakai, 2013. "An equity characterization of second price auctions when preferences may not be quasilinear," Review of Economic Design, Springer, vol. 17(1), pages 17-26, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto).
If references are entirely missing, you can add them using this form.