Overbidding and underbidding in package allocation problems

Marina Núñez () and Francisco Robles ()
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Marina Núñez: Universitat de Barcelona
Francisco Robles: Universitat de Barcelona

Social Choice and Welfare, 2024, vol. 62, issue 4, No 5, 739-759

Abstract: Abstract We study the problem of allocating packages of different objects to a group of bidders. A rule is overbidding-proof if no bidder has incentives to bid above his actual valuations. We prove that if an efficient rule is overbidding-proof, then each winning bidder pays a price between his winning bid and what he would pay in a Vickrey auction for the same package. In counterpart, the set of rules that satisfy underbidding-proofness always charge a price below the corresponding Vickrey price. A new characterization of the Vickrey allocation rule is provided with a weak form of strategy-proofness. The Vickrey rule is the only rule that satisfies efficiency, individual rationality, overbidding-proofness and underbidding-proofness. Our results are also valid on the domains of monotonic valuations and of single-minded bidders. Finally a family of overbidding rules is introduced that price the assigned packages at a fixed average of the Vickrey price and the pay-as-bid price.

Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00355-024-01506-5

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