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Equitable Auctions

Author

Listed:
  • Simon Finster
  • Patrick Loiseau
  • Simon Mauras
  • Mathieu Molina
  • Bary Pradelski
Abstract
We initiate the study of how auction design affects the division of surplus among buyers. We propose a parsimonious measure for equity and apply it to the family of standard auctions for homogeneous goods. Our surplus-equitable mechanism is efficient, Bayesian-Nash incentive compatible, and achieves surplus parity among winners ex-post. The uniform-price auction is equity-optimal if and only if buyers have a pure common value. Against intuition, the pay-as-bid auction is not always preferred in terms of equity if buyers have pure private values. In auctions with price mixing between pay-as-bid and uniform prices, we provide prior-free bounds on the equity-preferred pricing rule under a common regularity condition on signals.

Suggested Citation

  • Simon Finster & Patrick Loiseau & Simon Mauras & Mathieu Molina & Bary Pradelski, 2024. "Equitable Auctions," Papers 2403.07799, arXiv.org, revised Nov 2024.
    • Handle: RePEc:arx:papers:2403.07799
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    References listed on IDEAS

    as
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    4. Harold Cole & Daniel Neuhann & Guillermo Ordoñez, 2022. "Asymmetric Information and Sovereign Debt: Theory Meets Mexican Data," Journal of Political Economy, University of Chicago Press, vol. 130(8), pages 2055-2109.
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    6. Back, Kerry & Zender, Jaime F, 1993. "Auctions of Divisible Goods: On the Rationale for the Treasury Experiment," The Review of Financial Studies, Society for Financial Studies, vol. 6(4), pages 733-764.
    7. Klemperer, Paul, 1998. "Auctions with almost common values: The 'Wallet Game' and its applications," European Economic Review, Elsevier, vol. 42(3-5), pages 757-769, May.
    8. Robert Wilson, 1977. "A Bidding Model of Perfect Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 511-518.
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