Optimality versus practicality in market design: A comparison of two double auctions

• 成果类型: Article
• 署名作者: Satterthwaite, Mark A.; Williams, Steven R.; Zachariadis, Konstantinos E.
• 署名单位: Northwestern University; University of Illinois System; University of Illinois Urbana-Champaign; University of London; London School Economics & Political Science
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2014.03.014
• 发表日期: 2014
• 页码: 248-263
• 关键词: Double auction; Designed mechanism; correlated values

摘要

We consider a market for indivisible items with m buyers and m sellers. Traders privately know their values/costs, which are statistically dependent. Two mechanisms are considered. The buyer's bid double auction collects bids and asks from traders and determines the allocation by selecting a market-clearing price. It fails to achieve all possible gains from trade because of strategic bidding. The designed mechanism is a revelation mechanism in which honest reporting of values/costs is incentive compatible and all gains from trade are achieved. This optimality, however, comes at the expense of plausibility: (i) the monetary transfers among the traders are defined in terms of the traders' beliefs about each other's value/cost; (ii) a trader may suffer a loss ex post; (iii) the mechanism may run a surplus/deficit ex post. We compare the virtues of the simple yet mildly inefficient buyer's bid double auction to the flawed yet perfectly efficient designed mechanism. (C) 2014 Elsevier Inc. All rights reserved.