Abstract

Fraction Auctions: The Tradeoff between Efficiency and Running Time

Jean-Jacques Herings, Maastricht University

Abstract:  

This paper studies the sales of a single indivisible object where bidders have continuous valuations. In Grigorieva, Herings, Müller, and Vermeulen (2009) it was shown that, in this setting, query auctions necessarily allocate inefficiently in equilibrium. In this paper we propose a new sequential auction, called the c-fraction auction. We show c-fraction auctions guarantee approximate efficiency at any desired level of accuracy, independent of the number of bidders. We discuss the running time and the efficiency in the ex-post equilibrium of the auction. We show that by changing the parameter c of the auction we can trade off efficiency against running time.

Slides