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Core-selecting auctions with incomplete information

  • Lawrence M. Ausubel
  • Oleg BaranovEmail author
Original Paper
  • 32 Downloads

Abstract

Core-selecting auctions were proposed as alternatives to the Vickrey–Clarke–Groves (VCG) mechanism for environments with complementarities. In this paper, we consider a simple incomplete-information model that allows correlations among bidders’ values. We perform a full equilibrium analysis of three core-selecting auction formats as applied to the “local-local-global” model. We show that seller revenues and efficiency from core-selecting auctions can improve as correlations among bidders’ values increase, producing outcomes that are closer to the true core than are the VCG outcomes. Thus, there may be a theoretical justification for policymakers to utilize core-selecting auctions rather than the VCG mechanism in certain environments.

Keywords

Core-selecting auction Combinatorial auction Vickrey auction VCG mechanism Spectrum auction 

JEL Classification

D44 D47 C72 

Notes

Compliance with ethical standards

Disclosure Statements

Lawrence M. Ausubel – I am chairman of and have an ownership interest in Power Auctions LLC, a consultancy that provides auction design and software implementation services to governments, non-governmental organizations and commercial enterprises, and I have received fees from Power Auctions exceeding US$10,000 in the past three years. Power Auctions may be considered an “interested” or a “relevant” party to the research reported in this paper. Oleg Baranov – I am an academic associate of Power Auctions LLC, a consultancy that provides auction design and software implementation services to governments, non-governmental organizations and commercial enterprises, and I have received fees from Power Auctions exceeding US$10,000 in the past three years. Power Auctions may be considered an “interested” or a “relevant” party to the research reported in this paper.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of MarylandCollege ParkUSA
  2. 2.Department of EconomicsUniversity of ColoradoBoulderUSA

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