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A New Payment Rule for Core-Selecting Package Auctions

  • Paul Klemperer
  • Aytek Erdil

We propose a new, easy-to-implement, class of payment rules, "Reference Rules", to make core-selecting package auctions more robust.� Small, almost-riskless, profitable deviations from "truthful bidding" are often easy�for bidders to find under currently-used payment rules.� Reference Rules perform better than existing rules on our marginal-incentive-to-deviate criterion, and are as robust as existing rules to large deviations.� Other considerations, including fairness and comprehensibility, also support the use of Reference Rules.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 2009-W11.

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Date of creation: 01 Nov 2009
Date of revision:
Handle: RePEc:oxf:wpaper:2009-w11
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  1. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
  2. Lawrence M. Ausubel & Paul Milgrom, 2002. "Ascending Auctions with Package Bidding," Working Papers 02004, Stanford University, Department of Economics.
  3. Paul Klemperer, 2010. "The Product-Mix Auction: A New Auction Design for Differentiated Goods," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 526-536, 04-05.
  4. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  6. Lawrence M. Ausubel & Peter Crampton & Paul Milgrom, 2004. "The Clock-Proxy Auction: A Practical Combinatorial Auction Design," Discussion Papers 03-034, Stanford Institute for Economic Policy Research.
  7. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
  8. Paul Milgrom, 2008. "Assignment Messages and Exchanges," Discussion Papers 08-014, Stanford Institute for Economic Policy Research.
  9. Robert W. Day & S. Raghavan, 2007. "Fair Payments for Efficient Allocations in Public Sector Combinatorial Auctions," Management Science, INFORMS, vol. 53(9), pages 1389-1406, September.
  10. Robert Day & Peter Cramton, 2008. "Quadratic Core-Selecting Payment Rules for Combinatorial Auctions," Papers of Peter Cramton 08qcspr, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
  11. Peter Cramton, 2009. "Spectrum Auction Design," Papers of Peter Cramton 09sad, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
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