An efficient dynamic auction for heterogeneous commodities (2000)
| Venue: | AMERICAN ECONOMIC REVIEW |
| Citations: | 59 - 7 self |
BibTeX
@TECHREPORT{Ausubel00anefficient,
author = {Lawrence M. Ausubel},
title = {An efficient dynamic auction for heterogeneous commodities},
institution = {AMERICAN ECONOMIC REVIEW},
year = {2000}
}
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Abstract
This paper proposes a new dynamic design for auctioning multiple heterogeneous commodities, generalizing earlier work that treated identical objects. An auctioneer wishes to allocate one or more units of each of K heterogeneous commodities to n bidders. The auctioneer announces a vector of current prices, bidders report back quantities demanded at these prices, and the auctioneer adjusts the prices. Units are credited to bidders at the current prices as their opponents ’ demands decline, and the process continues until every commodity market clears. Bidders, rather than being required to behave as price-takers, are permitted to strategically exercise their market power. Nevertheless, with pure private values, the proposed auction yields Walrasian equilibrium prices. An efficient outcome results, as from a Vickrey-Clarke-Groves mechanism, but bidders are only required to evaluate their demands along a one-dimensional path of prices, rather than reporting their utilities over the entire (K-dimensional) consumption set. The auction is also more transparent and potentially simpler for bidders to understand, and has the advantage of assuring the privacy of the upper portions of bidders ’ demands. Theoretically, the new auction provides a new foundation for convergence to Walrasian
