Open AccessDouble auction with interdependent values: Incentives and efficiency
Author(s) -
Kojima Fuhito,
Yamashita Takuro
Publication year - 2017
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te2275
Subject(s) - double auction , incentive compatibility , interdependence , microeconomics , incentive , rationality , mechanism (biology) , vickrey–clarke–groves auction , strategic dominance , economics , mechanism design , common value auction , mathematical economics , auction theory , philosophy , epistemology , political science , law
We study a double auction environment where buyers and sellers have interdependent valuations and multi‐unit demand and supply. We propose a new mechanism that satisfies ex post incentive compatibility, individual rationality, feasibility, nonwastefulness, and no budget deficit. Moreover, this mechanism is asymptotically efficient in that the trade outcome in the mechanism converges to the efficient level as in a competitive equilibrium as the numbers of the buyers and sellers become large. Our mechanism is the first double auction mechanism with these properties in the interdependent values setting.