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Characterizing the Vickrey Combinatorial Auction by Induction

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  • Chew Soo Hong
  • Shigehiro Serizawa

Abstract

This note studies the allocation of heterogeneous commodities to agents whose private values for combinations of these commodities are monotonic by inclusion. This setting can accommodate the presence of complementarity and substitutability among the heterogeneous commodities. By using induction logic, we provide an elementary proof of Holmstrom's (1919) characterization of the Vickrey combinatorial auction as the unique efficient, strategy-proof, and individually rational allocation rule. Our proof method can also be applied to domains to which his proof cannot be.

Suggested Citation

  • Chew Soo Hong & Shigehiro Serizawa, 2005. "Characterizing the Vickrey Combinatorial Auction by Induction," ISER Discussion Paper 0631, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:0631
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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