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A New and Improved Design for Multiobject Iterative Auctions

Listed author(s):
  • Anthony M. Kwasnica

    ()

    (Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802)

  • John O. Ledyard

    ()

    (Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, California 91125)

  • Dave Porter

    ()

    (Interdisciplinary Center for Economic Science, George Mason University, Fairfax, Virginia 22030)

  • Christine DeMartini

    ()

    (RAND, Santa Monica, California 90407)

In this paper we present a new improved design for multiobject auctions and report on the results of experimental tests of that design. We merge the better features of two extant but very different auction processes, the Simultaneous Multiple Round (SMR) design used by the FCC to auction the electromagnetic spectrum and the Adaptive User Selection Mechanism (AUSM) of Banks et al. (1989, "Allocating uncertain and unresponsive resources: An experimental approach," RAND Journal of Economics, Vol. 20, No. 1, pp. 1--25). Then, by adding one crucial new feature, we are able to create a new design, the Resource Allocation Design (RAD) auction process, which performs better than both. Our experiments demonstrate that the RAD auction achieves higher efficiencies, lower bidder losses, higher net revenues, and faster times to completion without increasing the complexity of a bidder's problem.

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File URL: http://dx.doi.org/10.1287/mnsc.1040.0334
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Article provided by INFORMS in its journal Management Science.

Volume (Year): 51 (2005)
Issue (Month): 3 (March)
Pages: 419-434

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Handle: RePEc:inm:ormnsc:v:51:y:2005:i:3:p:419-434
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  1. Jeffrey S. Banks & John O. Ledyard & David P. Porter, 1989. "Allocating Uncertain and Unresponsive Resources: An Experimental Approach," RAND Journal of Economics, The RAND Corporation, vol. 20(1), pages 1-25, Spring.
  2. 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.
  3. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  4. Bykowsky, Mark M & Cull, Robert J & Ledyard, John O, 2000. "Mutually Destructive Bidding: The FCC Auction Design Problem," Journal of Regulatory Economics, Springer, vol. 17(3), pages 205-228, May.
  5. Theodore Groves & John Ledyard, 1977. "Some limitations of demand revelaing processes," Public Choice, Springer, vol. 29(2), pages 107-124, March.
  6. Charles R. Plott, 1997. "Laboratory Experimental Testbeds: Application to the PCS Auction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 605-638, 09.
  7. Editor, 2001. "Contenido y Presentación," Capítulos de Libros PUCP / Chapters of PUCP books,in: Orlando Plaza (ed.), Perú. Actores y Escenarios al Inicio del Nuevo Milenio, edition 1, chapter 0, pages 5-12 Departamento de Economía - Pontificia Universidad Católica del Perú.
  8. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 341-388.
  9. Mark Armstrong, 2000. "Optimal Multi-Object Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 455-481.
  10. John O. Ledyard & Mark Olson & David Porter & Joseph A. Swanson & David P. Torma, 2002. "The First Use of a Combined-Value Auction for Transportation Services," Interfaces, INFORMS, vol. 32(5), pages 4-12, October.
  11. 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.
  12. Bikhchandani, Sushil & Ostroy, Joseph M., 2002. "The Package Assignment Model," Journal of Economic Theory, Elsevier, vol. 107(2), pages 377-406, December.
  13. Grether, David M & Isaac, R Mark & Plott, Charles R, 1981. "The Allocation of Landing Rights by Unanimity among Competitors," American Economic Review, American Economic Association, vol. 71(2), pages 166-171, May.
  14. David P. Porter, 1999. "The effect of bid withdrawal in a multi-object auction," Review of Economic Design, Springer;Society for Economic Design, vol. 4(1), pages 73-97.
  15. Coppinger, Vicki M & Smith, Vernon L & Titus, Jon A, 1980. "Incentives and Behavior in English, Dutch and Sealed-Bid Auctions," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 1-22, January.
  16. Steven R. Williams, 1999. "A characterization of efficient, bayesian incentive compatible mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(1), pages 155-180.
  17. Michael H. Rothkopf & Aleksandar Peke\v{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
  18. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
  19. 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.
  20. John O. Ledyard & David Porter & Antonio Rangel, 1997. "Experiments Testing Multiobject Allocation Mechanisms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 639-675, 09.
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