An Extension of Ausubel's Auction for Heterogeneous Discrete Goods

Abstract

ABSTRACTAusubel's dynamic private‐values auction for heterogeneous discrete goods, Ausubel (2006), yields an efficient equilibrium outcome but it is designed for a limited class of environments. If bidders’ values for bundles of goods are not integers, then Ausubel's auction may end without allocating goods if no information on bidders’ values is available. In this paper, I extend Ausubel's auction for heterogeneous discrete goods to real‐valued quasilinear utility functions. The mechanism I propose reaches a Walrasian equilibrium price vector in finite ‘steps’ without any additional information on bidders’ values. In the extension of Ausubel's auction, truthful bidding constitutes an efficient equilibrium.