Erdil, A. and Klemperer, P.
A new payment rule for core-selecting package auctions
Journal of the European Economic Association
Vol. 8(2-3) pp. 537-547 (2010)
Abstract: 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 Codes: D44, C71
Author links: Aytek Erdil
