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Worst-case optimal redistribution of VCG payments in multi-unit auctions

  • Guo, Mingyu
  • Conitzer, Vincent
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    For allocation problems with one or more items, the well-known Vickrey-Clarke-Groves (VCG) mechanism (aka Clarke mechanism, Generalized Vickrey Auction) is efficient, strategy-proof, individually rational, and does not incur a deficit. However, it is not (strongly) budget balanced: generally, the agents' payments will sum to more than 0. We study mechanisms that redistribute some of the VCG payments back to the agents, while maintaining the desirable properties of the VCG mechanism. Our objective is to come as close to budget balance as possible in the worst case. For auctions with multiple indistinguishable units in which marginal values are nonincreasing, we derive a mechanism that is optimal in this sense. We also derive an optimal mechanism for the case where we drop the non-deficit requirement. Finally, we show that if marginal values are not required to be nonincreasing, then the original VCG mechanism is worst-case optimal.

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    File URL: http://www.sciencedirect.com/science/article/B6WFW-4T0MMJS-1/2/e44b9c4441bdee92aecb2fe6ca77e3bb
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 67 (2009)
    Issue (Month): 1 (September)
    Pages: 69-98

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    Handle: RePEc:eee:gamebe:v:67:y:2009:i:1:p:69-98
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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    6. Goldberg, Andrew V. & Hartline, Jason D. & Karlin, Anna R. & Saks, Michael & Wright, Andrew, 2006. "Competitive auctions," Games and Economic Behavior, Elsevier, vol. 55(2), pages 242-269, May.
    7. Yokoo, Makoto & Sakurai, Yuko & Matsubara, Shigeo, 2004. "The effect of false-name bids in combinatorial auctions: new fraud in internet auctions," Games and Economic Behavior, Elsevier, vol. 46(1), pages 174-188, January.
    8. Graham, Daniel A & Marshall, Robert C, 1987. "Collusive Bidder Behavior at Single-Object Second-Price and English Auctions," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1217-39, December.
    9. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-38, March.
    10. Porter, Ryan & Shoham, Yoav & Tennenholtz, Moshe, 2004. "Fair imposition," Journal of Economic Theory, Elsevier, vol. 118(2), pages 209-228, October.
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