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Quadratic Core-Selecting Payment Rules for Combinatorial Auctions

Robert Day () and Peter Cramton ()

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: We report on the use of a quadratic programming technique in recent and upcoming spectrum auctions in Europe. Specifically, we compute a unique point in the core that minimizes the sum of squared deviations from a reference point, for example, from the Vickrey-Clarke-Groves payments. Analyzing the Karush-Kuhn-Tucker conditions, we demonstrate that the resulting payments can be decomposed into a series of economically meaningful and equitable penalties. Furthermore, we discuss the benefits of this combinatorial auction, explore the use of alternative reserve pricing approaches in this context, and indicate the results of several hundred computational runs using CATS data.

Keywords: Auctions; spectrum auctions; market design; package auction; clock auction; combinatorial auction (search for similar items in EconPapers)
JEL-codes: D44 C78 L96 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2008, Revised 2012
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Published in Operations Research, 60:3, 588-603, 2012

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