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A note on the impossibility of multi-unit auctions with budget-constrained bidders

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  • Jianxin Yi

    (South China Normal University)

Abstract

In this paper, we focus on the domain of decreasing marginal valuations and show that in the presence of budget-constrained bidders there is no multi-unit auction that satisfies the following four properties: incentive compatibility, Pareto optimality, individual rationality and no positive transfers. This result strengthens the impossibility results of two previous studies.

Suggested Citation

  • Jianxin Yi, 2024. "A note on the impossibility of multi-unit auctions with budget-constrained bidders," Review of Economic Design, Springer;Society for Economic Design, vol. 28(2), pages 331-345, June.
    • Handle: RePEc:spr:reecde:v:28:y:2024:i:2:d:10.1007_s10058-023-00342-w
    DOI: 10.1007/s10058-023-00342-w
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    References listed on IDEAS

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    1. Lavi, Ron & May, Marina, 2012. "A note on the incompatibility of strategy-proofness and Pareto-optimality in quasi-linear settings with public budgets," Economics Letters, Elsevier, vol. 115(1), pages 100-103.
    2. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    3. Dobzinski, Shahar & Lavi, Ron & Nisan, Noam, 2012. "Multi-unit auctions with budget limits," Games and Economic Behavior, Elsevier, vol. 74(2), pages 486-503.
    4. Phuong Le, 2017. "Mechanisms for combinatorial auctions with budget constraints," Review of Economic Design, Springer;Society for Economic Design, vol. 21(1), pages 1-31, March.
    5. Toyotaka Sakai, 2008. "Second price auctions on general preference domains: two characterizations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 37(2), pages 347-356, November.
    6. Yi, Jianxin & Wang, Hefei & Li, Yong, 2018. "Designing efficient and incentive compatible mechanisms is almost impossible in quasi-linear environments," Economics Letters, Elsevier, vol. 173(C), pages 113-117.
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    More about this item

    Keywords

    Multi-unit auctions; Budget constraints; Incentive compatibility; Individual rationality; Pareto optimality;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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