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A New Payment Rule for Core-Selecting Package Auctions.

Abstract:
We propose a new, easy-to-implement, class of payment rules, "Reference Rules," to make core-selecting package auctions more robust. Small, almost riskless, profitable deviations from "truthful bidding" are often easy for bidders to find under currently-used payment rules. Reference Rules perform better than existing rules on our marginal-incentive-to-deviate criterion, and are as robust as existing rules to large deviations. Other considerations, including fairness and comprehensibility, also support the use of Reference Rules.

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Authors


Aytek Erdil More by this author
Paul Klemperer More by this author
Volume:
7487
Series:
CEPR Discussion Papers
Publication date:
2009-10-05
URN:
uuid:843f7df6-dfaf-44ad-a1a2-15b74eea3b36
Local pid:
oai:economics.ouls.ox.ac.uk:14332
Language:
English

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