Clinching Auctions Beyond Hard Budget Constraints
Gagan Goel, Vahab Mirrokni, Renato Paes Leme

TL;DR
This paper extends clinching auction frameworks to settings with more realistic liquidity constraints like average budgets, providing a general design for Pareto optimal and incentive compatible auctions in polymatroidal environments.
Contribution
It introduces a novel auction design for agents with constrained quasi-linear utilities, broadening the applicability of clinching auctions beyond hard budget constraints.
Findings
Characterizes tight sets in clinching auctions with new concepts of dropping prices and saturation.
Provides a general framework for Pareto optimal, incentive compatible auctions in polymatroidal environments.
Extends auction design to more realistic liquidity constraints like average budgets.
Abstract
Constraints on agent's ability to pay play a major role in auction design for any setting where the magnitude of financial transactions is sufficiently large. Those constraints have been traditionally modeled in mechanism design as \emph{hard budget}, i.e., mechanism is not allowed to charge agents more than a certain amount. Yet, real auction systems (such as Google AdWords) allow more sophisticated constraints on agents' ability to pay, such as \emph{average budgets}. In this work, we investigate the design of Pareto optimal and incentive compatible auctions for agents with \emph{constrained quasi-linear utilities}, which captures more realistic models of liquidity constraints that the agents may have. Our result applies to a very general class of allocation constraints known as polymatroidal environments, encompassing many settings of interest such as multi-unit auctions, matching…
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Taxonomy
TopicsAuction Theory and Applications · Consumer Market Behavior and Pricing · Game Theory and Applications
