Auctioning or assigning an object: some remarkable VCG mechanisms

Moulin, H. (2010) Auctioning or assigning an object: some remarkable VCG mechanisms. Social Choice and Welfare, 34(2), pp. 193-216. (doi: 10.1007/s00355-009-0393-5)

Abstract

We construct a variant of the Vickrey auction of a single object where the surplus is split in exogenously fixed shares between the seller and the buyers, up to a margin of error vanishingly exponentially as the number of buyers grows. When the object is the common property of the participants, we can similarly construct VCG mechanisms with a vanishingly small cash transfer to the residual claimant. For any integer q, 3 ≤ q ≤ n, we find the mechanism guaranteeing to each participant a fair share of the qth highest valuation, while minimizing the worst possible ratio of the cash transfer to the efficient surplus. We perform a parallel analysis when the object is undesirable. We compare the cash lost to the largest spread between individual valuations, and obtain the same trade-offs between fairness and the relative loss of surplus.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Moulin, Professor Herve
• Authors: Moulin, H.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Social Choice and Welfare
• ISSN: 0176-1714
• ISSN (Online): 1432-217X