A dominant strategy double clock auction with estimation‐based tâtonnement. Issue 3 (26th July 2021)

• Record Type: Journal Article
• Authors: Loertscher, Simon; Mezzetti, Claudio
• Is Part Of: Theoretical economics. Volume 16:Issue 3(2021)
• Page Start: 943
• Page End: 978
• Publication Date: 2021-07-26
• Subjects: Deficit free -- dominant strategy mechanisms -- double clock auctions -- individual rationality -- multidimensional types -- privacy preservation -- reserve prices -- VCG mechanism; C72 -- D44 -- D47 -- D82; Economics -- Periodicals; 330.01
• DOI: 10.3982/TE3311
• Languages: English
• ISSNs: 1933-6837

Abstract

Abstract : The price mechanism is fundamental to economics but difficult to reconcile with incentive compatibility and individual rationality. We introduce a double clock auction for a homogeneous good market with multidimensional private information and multiunit traders that is deficit‐free, ex post individually rational, constrained efficient, and makes sincere bidding a dominant strategy equilibrium. Under a weak dependence and an identifiability condition, our double clock auction is also asymptotically efficient. Asymptotic efficiency is achieved by estimating demand and supply using information from the bids of traders that have dropped out and following a tâtonnement process that adjusts the clock prices based on the estimates.