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The Duo-Item Bisection Auction

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  • Albin Erlanson

Abstract

This paper proposes an iterative sealed-bid auction for selling multiple heterogeneous items to bidders interested in buying at most one item. It generalizes the single item bisection auction (Grigorieva et al. Econ Theory, 30:107–118, 2007 ) to the environment with multiple heterogeneous items. We focus on the case with two items for sale. We show that the auction elicits a minimal amount of information on preferences required to find the Vickrey–Clark–Groves outcome (Clarke, Public Choice, XI:17–33, 1971 ; Groves, Econometrica, 61:617–631, 1973 ; Vickrey, J Finance, 16:8–37, 1961 ), when there are two items for sale and an arbitrary number of bidders. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Albin Erlanson, 2014. "The Duo-Item Bisection Auction," Computational Economics, Springer;Society for Computational Economics, vol. 43(1), pages 15-31, January.
    • Handle: RePEc:kap:compec:v:43:y:2014:i:1:p:15-31
    DOI: 10.1007/s10614-013-9380-0
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    References listed on IDEAS

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    1. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    2. Elena Grigorieva & P. Herings & Rudolf Müller & Dries Vermeulen, 2007. "The private value single item bisection auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 107-118, January.
    3. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    5. Lawrence M. Ausubel, 2004. "An Efficient Ascending-Bid Auction for Multiple Objects," American Economic Review, American Economic Association, vol. 94(5), pages 1452-1475, December.
    6. Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February.
    7. Mishra, Debasis & Parkes, David C., 2009. "Multi-item Vickrey-Dutch auctions," Games and Economic Behavior, Elsevier, vol. 66(1), pages 326-347, May.
    8. Tommy Andersson & Christer Andersson, 2012. "Properties of the DGS-Auction Algorithm," Computational Economics, Springer;Society for Computational Economics, vol. 39(2), pages 113-133, February.
    9. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
    10. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1991. "Protecting the winner : Second-price versus oral auctions," Economics Letters, Elsevier, vol. 35(3), pages 243-248, March.
    11. Motty Perry & Philip J. Reny, 2005. "An Efficient Multi-Unit Ascending Auction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 567-592.
    12. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Cited by:

    1. Javier Castro & Rosa Espínola & Inmaculada Gutiérrez & Daniel Gómez, 2023. "Auctions: A New Method for Selling Objects with Bimodal Density Functions," Computational Economics, Springer;Society for Computational Economics, vol. 61(4), pages 1707-1743, April.
    2. Ingebretsen Carlson, Jim, 2015. "An Approximate Auction," Working Papers 2015:19, Lund University, Department of Economics.
    3. Jim Ingebretsen Carlson, 2020. "A speedy auction using approximated bidders’ preferences," Annals of Operations Research, Springer, vol. 288(1), pages 65-93, May.
    4. Ingebretsen Carlson, Jim, 2016. "An Auction with Approximated Bidder Preferences - When an Auction has to be Quick," Working Papers 2016:12, Lund University, Department of Economics.

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    More about this item

    Keywords

    Bisection auction; Multi-item; Unit-demand; Sealed-bid; D44; C72;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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