Simultaneous auctions without complements are (almost) efficient

Michal Feldman, Hu Fu, Nick Gravin, Brendan Lucier

Research output: Contribution to journalArticlepeer-review

Abstract

A simultaneous item auction is a simple procedure for allocating multiple indivisible goods to a set of bidders. In a simultaneous auction, every bidder submits bids on all items simultaneously. The allocation and prices are then resolved for each item separately, based solely on the bids submitted on that item. Such procedures are similar to auctions used in practice (e.g. eBay) but are not incentive compatible. We study the efficiency of Bayesian Nash equilibrium (BNE) outcomes of simultaneous first- and second-price auctions when bidders have complement-free (a.k.a. subadditive) valuations. We show that the expected social welfare of any BNE is at least [Formula presented] of the optimal social welfare in the case of first-price auctions, and at least [Formula presented] in the case of second-price auctions.

Original languageEnglish
Pages (from-to)327-341
Number of pages15
JournalGames and Economic Behavior
Volume123
DOIs
StatePublished - Sep 2020

Keywords

  • Allocative efficiency
  • Auctions
  • Cost-benefit analysis noncooperative games asymmetric and private information
  • Mechanism design

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