An Efficient and Incentive Compatible Dynamic Auction for Multiple Complements

Ning Sun and Zaifu Yang

Discussion Papers from Department of Economics, University of York

Abstract: This article proposes an efficient and incentive compatible dynamic auction for selling multiple complementary goods to finitely many bidders. The goods are traded in discrete quantities. The seller has a reserve price for every bundle of goods and determines which bundles to sell based on prevailing prices. The auctioneer announces a current price for every bundle of goods and a supply set of goods, every bidder subsequently responds with a set of goods demanded at these prices, and then the auctioneer adjusts prices. We prove that even when bidders can exercise their market power strategically, this dynamic auction always induces them to bid truthfully as price-takers, resulting in an efficient allocation, its supporting Walrasian equilibrium price for every bundle of goods, and a generalized Vickrey-Clarke-Groves payment for every bidder.

Keywords: Dynamic auction; complements; incomplete information; incentive; efficiency; ex post perfect equilibrium; indivisibility. (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2014-05
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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Citations: View citations in EconPapers (26)

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Journal Article: An Efficient and Incentive Compatible Dynamic Auction for Multiple Complements (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:14/06

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