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First-price auctions on general preference domains: axiomatic characterizations

Author

Listed:
  • Tsuyoshi Adachi

    (Waseda University)

  • Takumi Kongo

    (Fukuoka University)

Abstract

In a single-item auction with agents having general preferences, first-price auctions are axiomatically characterized. In this study, we characterize first-price auctions by Pareto efficiency, individual rationality, anonymity in welfare, and non-bossiness in welfare. The first three properties are satisfied by second-price auctions. Considering the well-known fact that second-price auctions are strategy-proof, a clear distinction between first- and second-price auctions is reducible to the difference between non-bossiness and strategy-proofness, both of which are important properties with respect to agents’ strategic behavior. In the characterization, anonymity in welfare can be replaced by envy-freeness, which is also a basic property related to equity among agents. Furthermore, in our characterization, each of the properties, Pareto efficiency, individual rationality, and non-bossiness in welfare, is independent, and domains on which first-price auctions are characterized without equity properties are specified. By strengthening non-bossiness, we characterize first-price auctions by a weaker equity property called equal welfare to equals.

Suggested Citation

  • Tsuyoshi Adachi & Takumi Kongo, 2013. "First-price auctions on general preference domains: axiomatic characterizations," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(1), pages 93-103, May.
    • Handle: RePEc:spr:etbull:v:1:y:2013:i:1:d:10.1007_s40505-013-0001-9
    DOI: 10.1007/s40505-013-0001-9
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    1. William Thomson, 2016. "Non-bossiness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(3), pages 665-696, October.
    2. Takumi Kongo, 2020. "Similarities in axiomatizations: equal surplus division value and first-price auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 24(3), pages 199-213, December.

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    More about this item

    Keywords

    First-price auction; Axiomatic characterization; General preference; Non-bossiness; Equity;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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