Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/197165 
Authors: 
Year of Publication: 
2018
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 13 [Issue:] 2 [Publisher:] The Econometric Society [Place:] New Haven, CT [Year:] 2018 [Pages:] 831-868
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
This paper studies the possibility of implementing Pareto optimal outcomes in the combinatorial auction setting where bidders may have budget constraints. I show that when the setting involves a single good, or multiple goods but with single-minded bidders, there is a unique mechanism, called truncation Vickrey-Clarke-Groves (VCG), that is individually rational, incentive compatible, and Pareto optimal. Truncation VCG works by first truncating valuations at budgets, and then implementing standard VCG on the truncated valuations. I also provide maximal domain results, characterizing when it is possible to implement Pareto optimal outcomes and, if so, providing an implementing mechanism. Whenever there is at least one multi-minded constrained bidder and another multi-minded bidder, implementation is impossible. For any other domain, however, implementation is possible.
Subjects: 
Combinatorial auctions
budget constraints
Pareto optimality
single-minded
JEL: 
D44
D47
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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