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A New Payment Rule for Core-Selecting Package Auctions

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Author Info

  • 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. Lawrence M. Ausubel & Peter Cramton & Paul Milgrom, 2004. "The Clock-Proxy Auction: A Practical Combinatorial Auction Design," Papers of Peter Cramton 04mit5, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  2. Klemperer, Paul, 2009. "The Product-Mix Auction: a New Auction Design for Differentiated Goods," CEPR Discussion Papers 7395, C.E.P.R. Discussion Papers.
  3. 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.
  4. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
  5. Paul Milgrom, 2008. "Assignment Messages and Exchanges," Discussion Papers 08-014, Stanford Institute for Economic Policy Research.
  6. 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, vol. 97(1), pages 242-259, March.
  7. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  8. Lawrence M. Ausubel & Paul R. Milgrom, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 0(1), pages 1.
  9. Peter Cramton, 2009. "Spectrum Auction Design," Papers of Peter Cramton 09sad, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  10. Robert W. Day & S. Raghavan, 2007. "Fair Payments for Efficient Allocations in Public Sector Combinatorial Auctions," Management Science, INFORMS, vol. 53(9), pages 1389-1406, September.
  11. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
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Citations

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Cited by:
  1. Isa Hafalir & Hadi Yektas, . "Core Deviation Minimizing Auctions," GSIA Working Papers 2012-E23, Carnegie Mellon University, Tepper School of Business.
  2. Maarten Janssen & Vladimir Karamychev, 2013. "Gaming in Combinatorial Clock Auctions," Tinbergen Institute Discussion Papers 13-027/VII, Tinbergen Institute.
  3. Laurent Lamy, 2009. "Ascending auctions: some impossibility results and their resolutions with final price discounts," PSE Working Papers halshs-00575076, HAL.
  4. Jacob K. Goeree & Yuanchuan Lien, 2009. "On the impossibility of core-selecting auctions," IEW - Working Papers 452, Institute for Empirical Research in Economics - University of Zurich.
  5. Hitoshi Matsushima, 2011. "Efficient Combinatorial Exchanges," CARF F-Series CARF-F-258, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  6. Laurent Lamy, 2009. "Ascending auctions: some impossibility results and their resolutions with final price discounts," Working Papers halshs-00575076, HAL.

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