Equity in auction design with unit-demand agents and non-quasilinear preferences

TL;DR

This paper introduces the MWEP mechanism for auction design with non-quasilinear preferences, ensuring strategy-proofness, fairness, and efficiency in a setting with unit-demand agents.

Contribution

It characterizes a unique, equity-based mechanism (MWEP) that is strategy-proof, individually rational, and fair, extending classical auction theory to non-quasilinear preferences.

Findings

MWEP mechanism is strategy-proof and individually rational.

MWEP guarantees equal treatment, no-wastage, and no-subsidy.

Provides a novel equity-based characterization of auction mechanisms.

Abstract

We study a model of auction design where a seller is selling a set of objects to a set of agents who can be assigned no more than one object. Each agent's preference over (object, payment) pair need not be quasilinear. If the domain contains all classical preferences, we show that there is a unique mechanism, the minimum Walrasian equilibrium price (MWEP) mechanism, which is strategy-proof, individually rational, and satisfies equal treatment of equals, no-wastage (every object is allocated to some agent), and no-subsidy (no agent is subsidized). This provides an equity-based characterization of the MEWP mechanism, and complements the efficiency-based characterization of the MWEP mechanism known in the literature.