TY - JOUR
T1 - Multidimensional Mechanism Design for Auctions with Externalities
AU - Jehiel, Philippe
AU - Moldovanu, Benny
AU - Stacchetti, Ennio
N1 - Funding Information:
In an auction with externalities, a buyer’s type is multidimensional and specifies the payoff he would get for each of the N+1 possible outcomes: the seller keeps the object or buyer i (i=1, ..., N) gets the object. We provide a characterization of multidimensional incentive compatible mechanisms similar to that for one-dimensional mechanisms. Although reservation utilities are endogenous and type-dependent, the participation constraint is binding for only one ‘‘critical’’ type. A main difficulty in a multidimensional setting is the ‘‘integrability’’ condition. We present a geometric characterization for discontinuous conservative vector fields. In auctions where the buyers submit scalar bids and the seller transfers the object to one of the buyers for sure, a second-price auction maximizes revenue. With two buyers, this auction remains optimal even if the seller can set a reservation price. Journal of Economic Literature Classification Numbers: C7, C72. ν 1999 Academic Press * This research was supported in part by the National Science Foundation and Deutscheforschungsgemeinschaft (SFB 504) and started while the second author was visiting The University of Michigan in 1993. We thank the participants of the Workshop on Multidimensional Mechanism Design and Related Topics, sponsored by the Deutscheforschungsgemeinschaft and the Economics Department of the University of Bonn in June 1994. We are especially indebted to Roger Myerson who suggested an important simplification of our previous approach to the participation constraints; Section 4 does not depend on any of the symmetry assumptions we had made before. We are grateful to Jean-Charles Rochet and an anonymous editor who provided numerous comments.
PY - 1999/4
Y1 - 1999/4
N2 - In an auction with externalities, a buyer's type is multidimensional and specifies the payoff he would get for each of theN+1 possible outcomes: the seller keeps the object or buyeri(i=1,...,N) gets the object. We provide a characterization of multidimensional incentive compatible mechanisms similar to that for one-dimensional mechanisms. Although reservation utilities are endogenous and type-dependent, the participation constraint is binding for only one "critical" type. A main difficulty in a multidimensional setting is the "integrability" condition. We present a geometric characterization for discontinuous conservative vector fields. In auctions where the buyers submit scalar bids and the seller transfers the object to one of the buyers for sure, a second-price auction maximizes revenue. With two buyers, this auction remains optimal even if the seller can set a reservation price.Journal of Economic LiteratureClassification Numbers: C7, C72.
AB - In an auction with externalities, a buyer's type is multidimensional and specifies the payoff he would get for each of theN+1 possible outcomes: the seller keeps the object or buyeri(i=1,...,N) gets the object. We provide a characterization of multidimensional incentive compatible mechanisms similar to that for one-dimensional mechanisms. Although reservation utilities are endogenous and type-dependent, the participation constraint is binding for only one "critical" type. A main difficulty in a multidimensional setting is the "integrability" condition. We present a geometric characterization for discontinuous conservative vector fields. In auctions where the buyers submit scalar bids and the seller transfers the object to one of the buyers for sure, a second-price auction maximizes revenue. With two buyers, this auction remains optimal even if the seller can set a reservation price.Journal of Economic LiteratureClassification Numbers: C7, C72.
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U2 - 10.1006/jeth.1998.2501
DO - 10.1006/jeth.1998.2501
M3 - Article
AN - SCOPUS:0000978865
VL - 85
SP - 258
EP - 293
JO - Journal of Economic Theory
JF - Journal of Economic Theory
SN - 0022-0531
IS - 2
ER -