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Robustness of the Incentive Compatible Combinatorial Auction

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  • R. Isaac
  • Duncan James

Abstract

Goods are said to be combinatorial when the value of a bundle of goods is not equal to the sum of the values of the same goods unbundled. Investigations of combinatorial allocation problems should recognize that there are two separate aspects of such problems: an environmental distinction between multiple-unit allocation problems which involve combinatorial goods and those which do not do so, and an institutional distinction between auctions in which combinatorial values can be expressed as part of the bidding rules and those in which they cannot. Forsythe and Isaac (Research in Experimental Economics, Vol. 2 (1982). Greenwich, Conn.: JAI Press, Inc.) reports the extension of the Vickrey auction into a demand-revealing, multiple unit, private goods auction that can incorporate combinatorial values. This current paper places that theoretically demand-revealing institution in a series of experimental environments in order to generate results (e.g. efficiencies) which may serve as a benchmark for other auctions (combinatorial or otherwise) whose implementation characteristics may be more favorable. To aid in interpretation of our Vickrey experimental results, we also provide results of alternatives to Vickrey allocations from both institutional and heuristic sources, as well as a discussion of the source of the Vickrey auctions high efficiencies even in the presence of misrevelation. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • R. Isaac & Duncan James, 2000. "Robustness of the Incentive Compatible Combinatorial Auction," Experimental Economics, Springer;Economic Science Association, vol. 3(1), pages 31-53, June.
  • Handle: RePEc:kap:expeco:v:3:y:2000:i:1:p:31-53
    DOI: 10.1023/A:1009942024096
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    References listed on IDEAS

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    1. Cox, James C. & Isaac, R. Mark, 2008. "Procurement Contracting," Handbook of Experimental Economics Results, Elsevier.
    2. Attiyeh, Greg & Franciosi, Robert & Isaac, R Mark, 2000. "Experiments with the Pivot Process for Providing Public Goods," Public Choice, Springer, vol. 102(1-2), pages 95-114, January.
    3. 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 427-438, March.
    4. Michael H. Rothkopf & Aleksandar Pekev{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    5. 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.
    6. Banks, Jeffrey S. & Ledyard, John O. & Porter, David P., "undated". "Allocating Uncertain and Unresponsive Resources," Working Papers 680, California Institute of Technology, Division of the Humanities and Social Sciences.
    7. Krishna, Vijay & Rosenthal, Robert W., 1996. "Simultaneous Auctions with Synergies," Games and Economic Behavior, Elsevier, vol. 17(1), pages 1-31, November.
    8. 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.
    9. Forsythe, Robert & Isaac, R. Mark., "undated". "Demand-Revealing Mechanisms for Private Good Auctions," Working Papers 351, California Institute of Technology, Division of the Humanities and Social Sciences.
    10. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Citations

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    Cited by:

    1. Sherstyuk, Katerina, 2008. "Some Results on Anti-Competitive Behavior in Multi-Unit Ascending Price Auctions," Handbook of Experimental Economics Results, Elsevier.
    2. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September.
    3. Chen, Yan & Takeuchi, Kan, 2010. "Multi-object auctions with package bidding: An experimental comparison of Vickrey and iBEA," Games and Economic Behavior, Elsevier, vol. 68(2), pages 557-579, March.
    4. Kagel, John H. & Levin, Dan, 2005. "Multi-unit demand auctions with synergies: behavior in sealed-bid versus ascending-bid uniform-price auctions," Games and Economic Behavior, Elsevier, vol. 53(2), pages 170-207, November.
    5. Heczko, Alexander & Kittsteiner, Thomas & Ott, Marion, 2018. "The Performance of Core-Selecting Auctions: An Experiment," EconStor Preprints 176842, ZBW - German National Library of Economics.
    6. Kagel, John H. & Levin, Dan, 2009. "Implementing efficient multi-object auction institutions: An experimental study of the performance of boundedly rational agents," Games and Economic Behavior, Elsevier, vol. 66(1), pages 221-237, May.
    7. Sven de Vries & Rakesh Vohra, 2000. "Combinatorial Auctions: A Survey," Discussion Papers 1296, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. Duncan James, 2007. "Stability of risk preference parameter estimates within the Becker-DeGroot-Marschak procedure," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 123-141, June.
    9. Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multiunit Auctions," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 461-490, July.
    10. Yusufcan Masatlioglu & Sarah Taylor & Neslihan Uler, 2012. "Behavioral mechanism design: evidence from the modified first-price auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 16(2), pages 159-173, September.
    11. Martin Bichler & Alexander Pikovsky & Thomas Setzer, 2009. "An Analysis of Design Problems in Combinatorial Procurement Auctions," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(1), pages 111-117, February.
    12. Chernomaz, Kirill & Levin, Dan, 2012. "Efficiency and synergy in a multi-unit auction with and without package bidding: An experimental study," Games and Economic Behavior, Elsevier, vol. 76(2), pages 611-635.
    13. Tobias Scheffel & Georg Ziegler & Martin Bichler, 2012. "On the impact of package selection in combinatorial auctions: an experimental study in the context of spectrum auction design," Experimental Economics, Springer;Economic Science Association, vol. 15(4), pages 667-692, December.

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    Keywords

    combinatorial; auctions; Vickrey; experiments;

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