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Informational limitations of ascending combinatorial auctions

  • Blumrosen, Liad
  • Nisan, Noam

We study the inherent limitations of natural widely-used classes of ascending combinatorial auctions. Specifically, we show that ascending combinatorial auctions that do not use both non-linear prices and personalized prices cannot achieve social efficiency with general bidder valuations. We also show that the loss of efficiency can be severe and that only a diminishing fraction of the social welfare may be captured. This justifies the added complexity in the auctions suggested by, e.g., Parkes and Ungar (2000) [29] and Ausubel and Milgrom (2002) [2].

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File URL: http://www.sciencedirect.com/science/article/B6WJ3-4XMKBF6-1/2/78c0ccf7c29bebb9cb4ee7967c6bdf58
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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 3 (May)
Pages: 1203-1223

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:3:p:1203-1223
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  2. S.J. Rassenti & V.L. Smith & R.L. Bulfin, 1982. "A Combinatorial Auction Mechanism for Airport Time Slot Allocation," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 402-417, Autumn.
  3. Lehmann, Benny & Lehmann, Daniel & Nisan, Noam, 2006. "Combinatorial auctions with decreasing marginal utilities," Games and Economic Behavior, Elsevier, vol. 55(2), pages 270-296, May.
  4. Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February.
  5. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
  6. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
  7. Frank Kelly & Richard Steinberg, 2000. "A Combinatorial Auction with Multiple Winners for Universal Service," Management Science, INFORMS, vol. 46(4), pages 586-596, April.
  8. Cramton, Peter, 1998. "Ascending auctions," European Economic Review, Elsevier, vol. 42(3-5), pages 745-756, May.
  9. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
  10. repec:cup:cbooks:9780521536721 is not listed on IDEAS
  11. Bikhchandani, Sushil & Ostroy, Joseph M., 2002. "The Package Assignment Model," Journal of Economic Theory, Elsevier, vol. 107(2), pages 377-406, December.
  12. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
  13. Ausubel Lawrence M & Milgrom Paul R, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 1(1), pages 1-44, August.
  14. Nisan, Noam & Segal, Ilya, 2006. "The communication requirements of efficient allocations and supporting prices," Journal of Economic Theory, Elsevier, vol. 129(1), pages 192-224, July.
  15. Bikhchandani, Sushil & Mamer, John W., 1997. "Competitive Equilibrium in an Exchange Economy with Indivisibilities," Journal of Economic Theory, Elsevier, vol. 74(2), pages 385-413, June.
  16. repec:cup:cbooks:9780521551847 is not listed on IDEAS
  17. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1997. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 497-527, 09.
  18. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
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