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Faculty of Economics

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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  

Publisher's Link: http://web.ebscohost.com/ehost/detail?vid=3&sid=f1dd7110-20e0-46f0-a000-7a9ef4b984ad%40sessionmgr114&hid=112&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#db=bth&AN=49118322


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