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Overbidding and underbidding in package allocation problems

Author

Listed:
  • Marina Núñez

    (Universitat de Barcelona and Barcelona Economic Analysis Team (BEAT))

  • Francisco Robles

    (ABC Economics)

Abstract

We study the problem of allocating packages of different objects to a group of bidders. A rule is overbidding-proof if no bidder has incentives to bid above his actual valuations. We prove that if an efficient rule is overbidding-proof, then each winning bidder pays a price between his winning bid and what he would pay in a Vickrey auction for the same package. In counterpart, the set of rules that satisfy underbidding-proofness always charge a price below the corresponding Vickrey price. A new characterization of the Vickrey allocation rule is provided with a weak form of strategy-proofness. The Vickrey rule is the only rule that satisfies efficiency, individual rationality, overbidding-proofness and underbidding-proofness. Our results are also valid on the domains of monotonic valuations and of single-minded bidders. Finally, a rule is introduced that is overbidding proof and its payoffs are bidder-optimal in the core of the auction game according the reported valuations.

Suggested Citation

  • Marina Núñez & Francisco Robles, 2023. "Overbidding and underbidding in package allocation problems," UB School of Economics Working Papers 2023/440, University of Barcelona School of Economics.
    • Handle: RePEc:ewp:wpaper:440web
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    File URL: http://hdl.handle.net/2445/192403
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    References listed on IDEAS

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    More about this item

    Keywords

    Strategy-proofness; overbidding; Vickrey allocation rule.;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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