Characterizing the Vickrey Combinatorial Auction by Induction

12 Pages Posted: 21 Mar 2006

See all articles by Chew Soo Hong

Chew Soo Hong

Hong Kong University of Science & Technology - Department of Economics

Shigehiro Serizawa

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: March 2005

Abstract

This note studies the allocation of heterogeneous commodities to agents whose private values for combinations of these commodities are monotonic by inclusion. This setting can accommodate the presence of complementarity and substitutability among the heterogeneous commodities. By using induction logic, we provide an elementary proof of Holmstrom's (1919) characterization of the Vickrey combinatorial auction as the unique efficient, strategy-proof, and individually rational allocation rule. Our proof method can also be applied to domains to which his proof cannot be.

Keywords: Vickrey auction, Strategy-proofness, Induction, Heterogeneous commodities

JEL Classification: D44, C78, D71, D61, D82

Suggested Citation

Hong, Chew Soo and Serizawa, Shigehiro, Characterizing the Vickrey Combinatorial Auction by Induction (March 2005). Institute of Social and Economic Research Discussion Paper No. 631, Available at SSRN: https://ssrn.com/abstract=888961 or http://dx.doi.org/10.2139/ssrn.888961

Chew Soo Hong

Hong Kong University of Science & Technology - Department of Economics ( email )

Clear Water Bay
Kowloon, Hong Kong
China

Shigehiro Serizawa (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
+81 6 6879 8558 (Phone)
+81 6 6878 2766 (Fax)

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