Shapley Value Based Pricing for Auctions and Exchanges
Lindsay, L
Date: 3 November 2017
Journal
Games and Economic Behavior
Publisher
Elsevier
Publisher DOI
Abstract
This paper explores how the Shapley value can be used as the basis of a payment rule
for auctions and exchanges. The standard Shapley value is modified so that losing
bidders do not make or receive any payments. The new rule, called the balanced winner
contribution (BWC) rule, satisfies a variation of Myerson’s balanced contributi ...
This paper explores how the Shapley value can be used as the basis of a payment rule
for auctions and exchanges. The standard Shapley value is modified so that losing
bidders do not make or receive any payments. The new rule, called the balanced winner
contribution (BWC) rule, satisfies a variation of Myerson’s balanced contribution
property. The payment rule is fair in the sense that, with respect to reported values,
the members of every pair of traders make equal contributions to each other’s share of
the gains from trade. BWC payments can be used in single-item auctions and more
complex auctions and exchanges with multiple items and package bidding. A series
of examples is presented to illustrate how the BWC rule works and how the payments
compare to those based on competitive prices, the core, and the Vickrey-Clarke-Groves
mechanism
Economics
Faculty of Environment, Science and Economy
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