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A New Payment Rule for Core-Selecting Package Auctions

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  • Klemperer, Paul
  • Erdil, Aytek

Abstract

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.

Suggested Citation

  • Klemperer, Paul & Erdil, Aytek, 2009. "A New Payment Rule for Core-Selecting Package Auctions," CEPR Discussion Papers 7487, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7487
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    References listed on IDEAS

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    More about this item

    Keywords

    Combinatorial auction; Core; Core-selecting auction; Multi-object auction; Package auction; Robust design; Simultaneous ascending auction; Vickrey; Vickrey auction;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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