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Ascending Auctions with Package Bidding

By Paul Milgrom Lawrence M. Ausubel


A benchmark “package auction” is introduced in which bidders may determine their own packages on which to bid. If all bidders bid straightforwardly, then the outcome is a point in the core of the exchange economy that minimizes the seller’s revenue. When goods are substitutes, straightforward bidding strategies comprise an ex post Nash equilibrium. Compared to the Vickrey auction, the benchmark ascending package auction has cheaper information processing, better handling of budget constraints, and less vulnerability to joint bidding strategies among bidders who would otherwise be losers. Improvements are suggested that speed the auction and limit opportunities for collusion

Year: 2001
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