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A Generalized Vickrey Auction

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  • Lawrence Ausubel

    (University of Maryland)

Abstract

In auction environments where bidders have pure private values, the Vickrey auction (Vickrey, 1961) provides a simple mechanism for efficiently allocating homogeneous goods. However, in environments where bidders have interdependent values, the Vickrey auction does not generally yield efficiency. This manuscript defines a "generalized Vickrey auction" which yields efficiency when bidders have interdependent values. Each bidder reports her type to the auctioneer. Given the reports, the auctioneer determines the allocation that maximizes surplus. The payment rule is the following extension of Vickrey auction pricing: a bidder is charged for a given unit that she wins according to valuations evaluated at the minimum signal that she could have reported and still won that unit.

Suggested Citation

  • Lawrence Ausubel, 2000. "A Generalized Vickrey Auction," Econometric Society World Congress 2000 Contributed Papers 1257, Econometric Society.
    • Handle: RePEc:ecm:wc2000:1257
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    References listed on IDEAS

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    1. Lawrence Ausubel & Peter Cramton, 2004. "Vickrey auctions with reserve pricing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 493-505, March.
    2. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 341-388.
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    Cited by:

    1. Li, Yunan, 2017. "Approximation in mechanism design with interdependent values," Games and Economic Behavior, Elsevier, vol. 103(C), pages 225-253.

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