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Combinatorial Scoring Auctions

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  • Müller Rudolf
  • Perea Andrés
  • Wolf Sascha

    (METEOR)

Abstract

This paper is concerned with a combinatorial, multi-attribute procurement mechanism called combinatorial scoring auction. In the setting that we analyze, private information of the suppliers is multi-dimensional. The buyer wants to procure several items at once. Subsets of these items are characterized by a price as well as by a number of non-monetary attributes called quality (e.g. completion time). The suppliers submit offers specifying prices and quality levels for these subsets. These offers are evaluated according to a quasilinear scoring rule. Based on the resulting scores suppliers win contracts for the delivery of certain items. Such a contract only specifies the set of items a supplier has to deliver and a score that he has to meet. The decision about the specific price-quality combination yielding this contracted score is at the discretion of the supplier who aims at optimizing his own profit. We analyze the equilibria in such auctions and show the link between combinatorial scoring auctions and combinatorial price-only auctions. We demonstrate how this link can be used to employ preexisting knowledge about the equilibrium behavior in regular price-only auctions in the strategic analysis of combinatorial scoring auctions. Our results are the multi-item extension to the results of Asker and Cantillon (2007).

Suggested Citation

  • Müller Rudolf & Perea Andrés & Wolf Sascha, 2007. "Combinatorial Scoring Auctions," Research Memorandum 020, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  • Handle: RePEc:unm:umamet:2007020
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    File URL: https://cris.maastrichtuniversity.nl/portal/files/1273604/content
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    References listed on IDEAS

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    1. Babaioff, Moshe & Feldman, Michal & Nisan, Noam & Winter, Eyal, 2012. "Combinatorial agency," Journal of Economic Theory, Elsevier, vol. 147(3), pages 999-1034.
    2. Shahar Dobzinski & Noam Nisan & Michael Schapira, 2005. "Truthful Randomized Mechanisms for Combinatorial Auctions," Discussion Paper Series dp408, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    3. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter.
    4. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    5. Fernando Branco, 1997. "The Design of Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 63-81, Spring.
    6. Holzman, Ron & Kfir-Dahav, Noa & Monderer, Dov & Tennenholtz, Moshe, 2004. "Bundling equilibrium in combinatorial auctions," Games and Economic Behavior, Elsevier, vol. 47(1), pages 104-123, April.
    7. Richard V. Burkhauser & Paul J. Gertler, 1995. "Introduction," Journal of Human Resources, University of Wisconsin Press, vol. 30, pages s1-s6.
    8. Bichler, Martin & Kalagnanam, Jayant, 2005. "Configurable offers and winner determination in multi-attribute auctions," European Journal of Operational Research, Elsevier, vol. 160(2), pages 380-394, January.
    9. Krishna, Vijay & Maenner, Eliot, 2001. "Convex Potentials with an Application to Mechanism Design," Econometrica, Econometric Society, vol. 69(4), pages 1113-1119, July.
    10. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Cited by:

    1. Pierangelo Mori, 2008. "Design of Multidimensional Franchise Auctions by an Ignorant Principal," Working Papers - Economics wp2008_13.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Thomas Rieck, 2009. "Risk and Expected Utility Theory," Bonn Econ Discussion Papers bgse7_2009, University of Bonn, Germany.

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    mathematical economics;

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