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An Efficient Auction for Heterogeneous Discrete Goods When Preferences are Separable

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Author Info
Hakan Inal
Abstract

An important question in auction theory is designing a dynamic efficient auction mechanism for multiple objects when bidders’ values are interdependent. Perry and Reny (REStud 2005) introduced an efficient auction for discrete homogeneous goods when bidders’ values are interdependent. In this paper, I propose an ascending auction mechanism for heterogeneous goods when bidders’ values are interdependent. I construct the auction mechanism by using a Perry and Reny auction mechanism for each type of good. I show that if agents' utility functions are additively separable in goods, quasilinear in money and agents’ budget constraints are not binding, then this auction mechanism has an efficient equilibrium outcome.

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Paper provided by Economics and Econometrics Research Institute (EERI) in its series EERI Research Paper Series with number EERI_RP_2008_04.

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Length: 11 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:eei:rpaper:eeri_rp_2008_04

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Related research
Keywords: Auctions; Ausubel auction; heterogeneous goods auction; price adjustment; tatonnement.;

Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

This paper has been announced in the following NEP Reports:

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  1. Motty Perry & Philip J. Reny, 2005. "An Efficient Multi-Unit Ascending Auction," Review of Economic Studies, Blackwell Publishing, vol. 72(2), pages 567-592, 04. [Downloadable!] (restricted)
  2. Lawrence M. Ausubel, 2004. "An Efficient Ascending-Bid Auction for Multiple Objects," American Economic Review, American Economic Association, vol. 94(5), pages 1452-1475, December. [Downloadable!]
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