An Efficient Ascending-Bid Auction for Multiple Objects

TLDR

Standard auctions are inefficient when bidders have multi‑unit demands. The paper proposes a new ascending‑bid auction for homogeneous goods such as Treasury bills or spectrum. The auction repeatedly announces a price, bidders state quantities, items are clinched at that price, and the price rises until the market clears. With private values the auction achieves the same outcome as a Vickrey auction while being simpler and more private, and with interdependent values it can retain efficiency where Vickrey suffers from a Winner’s Curse.

Abstract

When bidders exhibit multi-unit demands, standard auction methods generally yield inefficient outcomes. This article proposes a new ascending-bid auction for homogeneous goods, such as Treasury bills or telecommunications spectrum. The auctioneer announces a price and bidders respond with quantities. Items are awarded at the current price whenever they are “clinched,” and the price is incremented until the market clears. With private values, this (dynamic) auction yields the same outcome as the (sealed-bid) Vickrey auction, but has advantages of simplicity and privacy preservation. With interdependent values, this auction may retain efficiency, whereas the Vickrey auction suffers from a generalized Winner's Curse.