Dual Auctions for Assigning Winners and Compensating Losers

John Wooders and Matthew Van Essen

No 20180013, Working Papers from New York University Abu Dhabi, Department of Social Science

Abstract: We study the problem of allocating goods (or rights) and chores when participants have equal claim on a unit of the good or equal obligation to undertake a chore. We propose two dynamic auctions for solving problems of this type: a "goods" auction and a "chore" auction, which are duals of one another. Either auction can be used for allocating goods or chores by suitably deÖning a good or a chore. The auctions are efficient and payoff equivalent. We provide necessary and sufficient conditions for equilibrium for general utility functions for both auctions, and provide closed-form solutions when bidders are risk neutral and when they are CARA risk averse. The auctions have the same limit equilibrium bid function as bidders become infinitely risk averse. We show that the limit bid function is also the unique maxmin perfect strategy for both auctions.

Pages: 60 pages
Date: 2018-01, Revised 2018-01
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic and nep-upt
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Citations: View citations in EconPapers (2)

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https://nyuad.nyu.edu/content/dam/nyuad/academics/ ... papers/2018/0013.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Dual auctions for assigning winners and compensating losers (2023)
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