Pareto efficient combinatorial auctions: dichotomous preferences without quasilinearity

Komal Malik () and Debasis Mishra
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Komal Malik: Indian Statistical Institute, Delhi

Discussion Papers from Indian Statistical Institute, Delhi

Abstract: We consider a combinatorial auction model where preferences of agents over bundles of objects and transfers need not be quasilinear. We show the salience of dichotomous preferences in this model: an agent with dichotomous preference partitions the set of bundles of objects as acceptable and unacceptable, and at the same transfer level, she is indifferent between bundles in each class but strictly prefers acceptable to unacceptable bundles. We show that there is no Pareto efficient, dominant strategy incentive compatible (DSIC), individually rational (IR) mechanism satisfying no subsidy if the domain of preferences includes all dichotomous preferences. However, a generalization of the VCG mechanism is Pareto efficient, DSIC, IR and satisfies no subsidy if the domain of preferences is the set of all positive income effect dichotomous preferences. We show tightness of this result: adding a non-dichotomous preference (satisfying some natural properties) to such a domain of preferences brings back the impossibility result.

Keywords: combinatorial auctions; non-quasilinear preferences; dichotomous preferences; single-minded bidders (search for similar items in EconPapers)
JEL-codes: D82 D90 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2018-05
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Related works:
Working Paper: Pareto efficient combinatorial auctions: dichotomous preferences without quasilinearity (2020)
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