Open AccessA NEW PAYMENT RULE FOR CORE‐SELECTING PACKAGE AUCTIONS
Author(s) -
Erdil Aytek,
Klemperer Paul
Publication year - 2010
Publication title -
journal of the european economic association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 7.792
H-Index - 93
eISSN - 1542-4774
pISSN - 1542-4766
DOI - 10.1111/j.1542-4774.2010.tb00524.x
Subject(s) - common value auction , payment , core (optical fiber) , economics , business , law and economics , library science , actuarial science , political science , computer science , finance , telecommunications , microeconomics
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. (JEL: D44, C71)