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A New Payment Rule for Core-Selecting Package Auctions

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  • Aytek Erdil

    ()
    (Dept of Economics, University of Oxford, Oxford)

  • Paul Klemperer

    ()
    (Dept of Economics, University of Oxford, Oxford)

Abstract

We propose a new, easy-to-implement, class of payment rules, “Reference Rules,” to make core-selecting package auctions more robust. Small, almost riskless, profitable deviations from “truthful bidding” are often easy for bidders to find under currently-used payment rules. Reference Rules perform better than existing rules on our marginal-incentive-to-deviate criterion, and are as robust as existing rules to large deviations. Other considerations, including fairness and comprehensibility, also support the use of Reference Rules.

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File URL: http://www.nuffield.ox.ac.uk/economics/papers/2009/w11/cspa-23-9-2009.pdf
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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2009-W11.

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Length: 16 pages
Date of creation: 01 Sep 2009
Date of revision:
Handle: RePEc:nuf:econwp:0911

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Web page: http://www.nuff.ox.ac.uk/economics/

Related research

Keywords: multi-object auction; core; combinatorial auction; package auction; core-selecting auction; Vickrey auction; Vickrey; simultaneous ascending auction; robust design.;

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References

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  1. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, Springer, vol. 36(3), pages 393-407, March.
  2. 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, American Economic Association, vol. 97(1), pages 242-259, March.
  3. Paul Milgrom, 2009. "Assignment Messages and Exchanges," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 1(2), pages 95-113, August.
  4. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, Elsevier, vol. 29(2), pages 265-281, April.
  5. Paul Klemperer, 2010. "The Product-Mix Auction: A New Auction Design for Differentiated Goods," Journal of the European Economic Association, MIT Press, MIT Press, vol. 8(2-3), pages 526-536, 04-05.
  6. Robert Day & Peter Cramton, 2008. "Quadratic Core-Selecting Payment Rules for Combinatorial Auctions," Papers of Peter Cramton 08qcspr, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  7. Lawrence M. Ausubel & Peter Crampton & Paul Milgrom, 2004. "The Clock-Proxy Auction: A Practical Combinatorial Auction Design," Discussion Papers, Stanford Institute for Economic Policy Research 03-034, Stanford Institute for Economic Policy Research.
  8. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  9. Ausubel Lawrence M & Milgrom Paul R, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 1(1), pages 1-44, August.
  10. Peter Cramton, 2009. "Spectrum Auction Design," Papers of Peter Cramton 09sad, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  11. Robert W. Day & S. Raghavan, 2007. "Fair Payments for Efficient Allocations in Public Sector Combinatorial Auctions," Management Science, INFORMS, INFORMS, vol. 53(9), pages 1389-1406, September.
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Cited by:
  1. Lawrence M. Ausubel & Oleg V. Baranov, 2014. "Market Design and the Evolution of the Combinatorial Clock Auction," American Economic Review, American Economic Association, American Economic Association, vol. 104(5), pages 446-51, May.
  2. Hitoshi Matsushima, 2011. "Efficient Combinatorial Exchanges," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-826, CIRJE, Faculty of Economics, University of Tokyo.
  3. Ning Sun & Zaifu Yang, 2014. "An Efficient and Incentive Compatible Dynamic Auction for Multiple Complements," Discussion Papers, Department of Economics, University of York 14/06, Department of Economics, University of York.
  4. Todd R. Kaplan & Shmuel Zamir, 2014. "Advances in Auctions," Discussion Papers, Exeter University, Department of Economics 1405, Exeter University, Department of Economics.
  5. Thomas Greve & Michael G. Pollitt Author-X-Name-First Michael, . "Network Procurement Auctions," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1347, Faculty of Economics, University of Cambridge.
  6. Peter Cramton, 2009. "Spectrum Auction Design," Papers of Peter Cramton 09sad, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  7. Maarten Janssen & Vladimir Karamychev, 2013. "Gaming in Combinatorial Clock Auctions," Tinbergen Institute Discussion Papers, Tinbergen Institute 13-027/VII, Tinbergen Institute, revised 16 Dec 2013.
  8. Isa Hafalir & Hadi Yektas, . "Core Deviation Minimizing Auctions," GSIA Working Papers, Carnegie Mellon University, Tepper School of Business 2012-E23, Carnegie Mellon University, Tepper School of Business.
  9. Laurent Lamy, 2009. "Ascending auctions: some impossibility results and their resolutions with final price discounts," PSE Working Papers, HAL halshs-00575076, HAL.
  10. Mochon, A. & Saez, Y. & Gomez-Barroso, J.L. & Isasi, P., 2012. "Exploring pricing rules in combinatorial sealed-bid auctions," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 82(2), pages 462-478.
  11. Jacob K. Goeree & Yuanchuan Lien, 2009. "On the impossibility of core-selecting auctions," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 452, Institute for Empirical Research in Economics - University of Zurich.
  12. Martin Bichler & Pasha Shabalin & Jürgen Wolf, 2013. "Do core-selecting Combinatorial Clock Auctions always lead to high efficiency? An experimental analysis of spectrum auction designs," Experimental Economics, Springer, Springer, vol. 16(4), pages 511-545, December.
  13. Dolf Talman & Zaifu Yang, 2013. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Papers, Department of Economics, University of York 13/31, Department of Economics, University of York.
  14. Akiyoshi Shioura & Zaifu Yang, 2013. "Equilibrium, Auction, Multiple Substitutes and Complements," Discussion Papers, Department of Economics, University of York 13/17, Department of Economics, University of York.
  15. Ott, Marion & Beck, Marissa, 2013. "Incentives for Overbidding in Minimum-Revenue Core-Selecting Auctions," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 79946, Verein für Socialpolitik / German Economic Association.
  16. repec:hal:wpaper:halshs-00575076 is not listed on IDEAS
  17. Sano, Ryuji, 2012. "Non-bidding equilibrium in an ascending core-selecting auction," Games and Economic Behavior, Elsevier, Elsevier, vol. 74(2), pages 637-650.
  18. Lamy, Laurent, 2012. "On minimal ascending auctions with payment discounts," Games and Economic Behavior, Elsevier, Elsevier, vol. 75(2), pages 990-999.

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