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Title:A dynamic auction for multi-object procurement under a hard budget constraint PDF Logo
Authors:Giebe, Thomas
Ensthaler, Ludwig
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Optimal Monitoring and Mechanism Design B17-V2
Abstract:A budget-constrained buyer wants to purchase items from a shortlisted set. Items are differentiated by observable quality and sellers have private reserve prices for their items. Sellers quote prices strategically, inducing a knapsack game. The buyer's problem is to select a subset of maximal quality. We propose a procurement mechanism that can be viewed as a game-theoretic extension of the greedy-split heuristic for the classic knapsack problem. The mechanism exhibits truthtelling in dominant strategies, is ex-post rational, and satisfies the hard budget constraint. Our mechanism obtains an optimal monotone pricing allocation if all items have the same quality. With different qualities, the equilibrium allocation is an optimal proportional pricing allocation.
Subjects:Auctions
Mechanism Design
Knapsack Problem
Dominant Strategy
Budget
Procurement
JEL:D44
D45
D82
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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