Multi-Object/Multidimensional Auctions

Pennsylvania State Univ University Park, University Park PA

Investigators

Abstract

The project deals with the study of ex-post efficient multi-object auctions when there are a finite number of possibly heterogeneous goods and agents' values are interdependent. The recent spurt of interest in the study of ex-post efficient, multiple-object auctions is largely the result of large-scale privatization of socially held assets by governments. In light of the influence economic theory has had on the recent design of a number of these privatization auctions, it is of some importance to understand which of the results from the one-dimensional symmetric auction literature, on which economists base most of their intuition, are sensitive to dimensionality, heterogeneity, and interdependency. This is especially germane since the multi-object, multi-dimensional case is by far the more common. Recent work by the PI in collaboration with another researcher extended Vickrey's ex-post efficient multiunit auction to environments with interdependent values. (As a by-product of this analysis they also established the ex-post efficiency of the recently designed FCC auction.) However, while the modified version of Vickrey's auction is simple to play in principle, it requires the bidders to submit many bids to the auctioneer. This is rather onerous from a practical point of view. An ascending version of the above auction that allowed simpler equilibrium bidding behavior would be a significant practical advantage. The first project described in the proposal outlines plans to explore this possibility. The second part of the proposal outlines plans to further generalize the auction environment. As in Vickrey, the researcher's modified auction has so far been one in which goods are homogeneous and bidders' demands are downward sloping. However, these assumptions are often too restrictive to describe some of the more common environments. The proposal describes plans to extend the modified Vickrey auction to the case of heterogeneous goods and interdependent valuations.