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Core-selecting package auctions

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Abstract

Auctions that select core allocations with respect to reported values generate competitive levels of sales revenues at equilibrium and limit bidder incentives to use shills. Among core-selecting auctions, the ones that minimize seller revenues also maximize incentives for truthful reporting, produce the Vickrey outcome when that lies in the core and, in contrast to the Vickrey auction, and create no incentive for a seller to exclude qualified bidders. Core-selecting auctions are related to and share properties with stable matching mechanisms.

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Author information

Authors and Affiliations

  1. School of Business, University of Connecticut, 2100 Hillside Road, U-1041, Storrs, CT, 06269-1041, USA

    Robert Day

  2. Department of Economics, Stanford University, Landau Economics Building 579 Serra Mall, Stanford, CA, 94305, USA

    Paul Milgrom

Authors
  1. Robert Day
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  2. Paul Milgrom
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Correspondence to Paul Milgrom.

Additional information

This paper evolved from Milgrom (2006), which reported a portion of Milgrom’s Clarendon lectures for 2005. The authors subsequently discovered that versions of what is here Theorem 3 appeared both in that paper and one produced independently by Day and Raghavan (2006). We have collaborated on this revision; in particular, nearly all of the material on shill bidding is new.

Milgrom received financial support for this research from National Science Foundation under grant ITR-0427770. We thank Roger Myerson for suggesting the connection to Howard Raiffa’s observations about bargaining, Yeon-Koo Che for comments on an earlier draft, and Manuj Garg for proofreading.

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Day, R., Milgrom, P. Core-selecting package auctions. Int J Game Theory 36, 393–407 (2008). https://doi.org/10.1007/s00182-007-0100-7

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  • DOI: https://doi.org/10.1007/s00182-007-0100-7

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