IDEAS home Printed from https://ideas.repec.org/p/nad/wpaper/20180013.html
   My bibliography  Save this paper

Dual Auctions for Assigning Winners and Compensating Losers

Author

Listed:
  • John Wooders
  • Matt Van Essen

    (Division of Social Science)

Abstract

We study the problem of allocating goods (or rights) and chores when participants have equal claim on a unit of the good or equal obligation to undertake a chore. We propose two dynamic auctions for solving problems of this type: a "goods" auction and a "chore" auction, which are duals of one another. Either auction can be used for allocating goods or chores by suitably deÖning a good or a chore. The auctions are efficient and payoff equivalent. We provide necessary and sufficient conditions for equilibrium for general utility functions for both auctions, and provide closed-form solutions when bidders are risk neutral and when they are CARA risk averse. The auctions have the same limit equilibrium bid function as bidders become infinitely risk averse. We show that the limit bid function is also the unique maxmin perfect strategy for both auctions.

Suggested Citation

  • John Wooders & Matt Van Essen, 2018. "Dual Auctions for Assigning Winners and Compensating Losers," Working Papers 20180013, New York University Abu Dhabi, Department of Social Science, revised Jan 2018.
  • Handle: RePEc:nad:wpaper:20180013
    as

    Download full text from publisher

    File URL: https://nyuad.nyu.edu/content/dam/nyuad/academics/divisions/social-science/working-papers/2018/0013.pdf
    File Function: First version, 2018
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Van Essen, Matt & Wooders, John, 2016. "Dissolving a partnership dynamically," Journal of Economic Theory, Elsevier, vol. 166(C), pages 212-241.
    2. Hu, Audrey & Zou, Liang, 2015. "Sequential auctions, price trends, and risk preferences," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 319-335.
    3. Walker, Mark, 1980. "On the Nonexistence of a Dominant Strategy Mechanism for Making Optimal Public Decisions," Econometrica, Econometric Society, vol. 48(6), pages 1521-1540, September.
    4. María‐Angeles de Frutos & Thomas Kittsteiner, 2008. "Efficient partnership dissolution under buy‐sell clauses," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 184-198, March.
    5. Long, Yan & Mishra, Debasis & Sharma, Tridib, 2017. "Balanced ranking mechanisms," Games and Economic Behavior, Elsevier, vol. 105(C), pages 9-39.
    6. 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.
    7. Richard R. W. Brooks & Claudia M. Landeo & Kathryn E. Spier, 2010. "Trigger happy or gun shy? Dissolving common‐value partnerships with Texas shootouts," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 649-673, December.
    8. Claudio Mezzetti, 2011. "Sequential Auctions with Informational Externalities and Aversion to Price Risk: Decreasing and Increasing Price Sequences," Economic Journal, Royal Economic Society, vol. 121(555), pages 990-1016, September.
    9. Preston McAfee, R., 1992. "Amicable divorce: Dissolving a partnership with simple mechanisms," Journal of Economic Theory, Elsevier, vol. 56(2), pages 266-293, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yan Long, 2020. "Optimal budget-balanced ranking mechanisms to assign identical objects," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(2), pages 467-502, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Van Essen, Matt & Wooders, John, 2016. "Dissolving a partnership dynamically," Journal of Economic Theory, Elsevier, vol. 166(C), pages 212-241.
    2. Seiglie Carlos & Xiang Jun, 2017. "Determining Values Using Options Contracts," Asian Journal of Law and Economics, De Gruyter, vol. 8(1), pages 1-17, April.
    3. Richard R. W. Brooks & Claudia M. Landeo & Kathryn E. Spier, 2010. "Trigger happy or gun shy? Dissolving common‐value partnerships with Texas shootouts," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 649-673, December.
    4. Brown, Alexander L. & Velez, Rodrigo A., 2016. "The costs and benefits of symmetry in common-ownership allocation problems," Games and Economic Behavior, Elsevier, vol. 96(C), pages 115-131.
    5. Kittsteiner, Thomas & Ockenfels, Axel & Trhal, Nadja, 2012. "Partnership dissolution mechanisms in the laboratory," Economics Letters, Elsevier, vol. 117(2), pages 394-396.
    6. Comino, Stefano & Nicolò, Antonio & Tedeschi, Piero, 2010. "Termination clauses in partnerships," European Economic Review, Elsevier, vol. 54(5), pages 718-732, July.
    7. Yuri Khoroshilov, 2018. "Partnership Dissolution: Information and Efficiency+," Decision Analysis, INFORMS, vol. 15(3), pages 133-138, September.
    8. Ludwig Ensthaler & Thomas Giebe & Jianpei Li, 2014. "Speculative partnership dissolution with auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 18(2), pages 127-150, June.
    9. Laffont, Jean-Jacques & Martimort, David, 2005. "The design of transnational public good mechanisms for developing countries," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 159-196, February.
    10. Athanassoglou, Stergios & Brams, Steven J. & Sethuraman, Jay, 2010. "A note on the inefficiency of bidding over the price of a share," Mathematical Social Sciences, Elsevier, vol. 60(3), pages 191-195, November.
    11. Jianpei Li & Yi Xue & Weixing Wu, 2013. "Partnership dissolution and proprietary information," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(2), pages 495-527, February.
    12. Tomoeda, Kentaro, 2019. "Efficient investments in the implementation problem," Journal of Economic Theory, Elsevier, vol. 182(C), pages 247-278.
    13. Wilson, Alistair J. & Wu, Hong, 2017. "At-will relationships: How an option to walk away affects cooperation and efficiency," Games and Economic Behavior, Elsevier, vol. 102(C), pages 487-507.
    14. Clark Robinson & Gerry Suchanek, 1985. "On the design of optimal mechanisms for the Arrow-Hahn-McKenzie economy," Public Choice, Springer, vol. 47(2), pages 313-335, January.
    15. Tian, Guoqiang, 1997. "Virtual implementation in incomplete information environments with infinite alternatives and types," Journal of Mathematical Economics, Elsevier, vol. 28(3), pages 313-339, October.
    16. Nicola Dimitri, 2021. "The “Italian Football Federation Auction” for Co-ownership Resolution," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(2), pages 275-285, March.
    17. Diego Moreno & María Moscoso, 2013. "Strategy-proof allocation mechanisms for economies with public goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(1), pages 315-336, January.
    18. Yan Chen & Fang-Fang Tang, 1998. "Learning and Incentive-Compatible Mechanisms for Public Goods Provision: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 633-662, June.
    19. Hyndman, Kyle, 2021. "Dissolving partnerships under risk: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 702-720.
    20. Louis Makowski & Joseph M. Ostroy, 1992. "General Equilibrium and Market Socialism: Clarifying the Logic of Competitive Markets," UCLA Economics Working Papers 672, UCLA Department of Economics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nad:wpaper:20180013. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ecnyuae.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alizeh Batra The email address of this maintainer does not seem to be valid anymore. Please ask Alizeh Batra to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/ecnyuae.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.