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An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders

  • Dolf Talman
  • Zaifu Yang
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    An auctioneer wishes to sell several heterogeneous indivisible items to a group of potential bidders. Each bidder has valuations over the items but might face a budget constraint and may therefore not be able to pay up to his values. In such markets, a competitive equilibrium typically fails to exist. We develop a novel dynamic auction and prove that the auction always ï¬nds a core allocation. The core allocation consists of an assignment of the items and its associated supporting price vector and is Pareto efficient.

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    Paper provided by Department of Economics, University of York in its series Discussion Papers with number 13/31.

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    Date of creation: Nov 2013
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    Handle: RePEc:yor:yorken:13/31
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    1. Milgrom, Paul, 1998. "Putting auction theory to work : the simultaneous ascending auction," Policy Research Working Paper Series 1986, The World Bank.
    2. repec:cup:cbooks:9780521536721 is not listed on IDEAS
    3. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford.
    4. Paul Klemperer, 2004. "Introduction to Auctions: Theory and Practice
      [Auctions: Theory and Practice]
      ," Introductory Chapters, Princeton University Press.
    5. Ning Sun & Zaifu Yang, 2009. "A Double-Track Adjustment Process for Discrete Markets With Substitutes and Complements," Econometrica, Econometric Society, vol. 77(3), pages 933-952, 05.
    6. Aytek Erdil & Paul Klemperer, 2009. "A New Payment Rule for Core-Selecting Package Auctions," Economics Papers 2009-W11, Economics Group, Nuffield College, University of Oxford.
    7. Carolyn Pitchik, 1989. "Budget-Constrained Sequential Auctions With Incomplete Information," STICERD - Theoretical Economics Paper Series 201, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    8. Zheng, Charles Z., 2001. "High Bids and Broke Winners," Journal of Economic Theory, Elsevier, vol. 100(1), pages 129-171, September.
    9. Jean-Pierre Benoit & Vijay Krishna, 1998. "Multiple-Object Auctions with Budget Constrained Bidders," Game Theory and Information 9805001, EconWPA, revised 26 Jul 1999.
    10. Sandro Brusco & Giuseppe Lopomo, 2008. "BUDGET CONSTRAINTS AND DEMAND REDUCTION IN SIMULTANEOUS ASCENDING-BID AUCTIONS -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 113-142, 03.
    11. Talman, A.J.J. & Yang, Z.F., 2011. "An Efficient Multi-Item Dynamic Auction with Budget Constrained Bidders," Discussion Paper 2011-096, Tilburg University, Center for Economic Research.
    12. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    13. Lawrence M. Ausubel & Paul Milgrom, 2002. "Ascending Auctions with Package Bidding," Working Papers 02004, Stanford University, Department of Economics.
    14. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
    15. repec:cup:cbooks:9780521551847 is not listed on IDEAS
    16. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
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