OPTIMAL MULTI-ATTRIBUTE AUCTIONS FOR DIVISIBLE GOODS

Congjun Rao (), Yong Zhao () and Yang Chen ()
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Congjun Rao: Institute of Systems Engineering, Huazhong University of Science and Technology, Wuhan 430074, P. R. China;
Yong Zhao: Institute of Systems Engineering, Huazhong University of Science and Technology, Wuhan 430074, P. R. China
Yang Chen: Institute of Systems Engineering, Huazhong University of Science and Technology, Wuhan 430074, P. R. China

International Journal of Information Technology & Decision Making (IJITDM), 2011, vol. 10, issue 05, 891-911

Abstract: In this paper, the problem of multi-attribute procurement auction of divisible goods is investigated, and an optimal mechanism of multi-attribute auction, which enables negotiation on several attributes in addition to the price of a divisible good, is designed. First, several important assumptions of multi-attribute procurement auctions of divisible goods are given, and the buyer's utility function and the supplier's utility function are defined. Then, a set of sufficient conditions for feasible multi-attribute auction mechanism are given. Based on these conditions, an optimal model of multi-attribute procurement auction whose goal is to maximize the buyer's expected utility, is established. By solving this model, the optimal allocation strategies are obtained. Third, the properties of the optimal multi-attribute auction are discussed. Finally, a multi-attribute auction example about the steam coal procurement is given to show how to implement the optimal multi-attribute auction mechanism.

Keywords: Divisible goods; multi-attribute procurement auctions; optimal auction; mechanism design (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219622011004622

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