A New and Improved Design for Multiobject Iterative Auctions
In this paper we present a new improved design for multiobject auctions and report on the results of experimental tests of that design. We merge the better features of two extant but very different auction processes, the Simultaneous Multiple Round (SMR) design used by the FCC to auction the electromagnetic spectrum and the Adaptive User Selection Mechanism (AUSM) of Banks et al. (1989, "Allocating uncertain and unresponsive resources: An experimental approach," RAND Journal of Economics, Vol. 20, No. 1, pp. 1–25). Then, by adding one crucial new feature, we are able to create a new design, the Resource Allocation Design (RAD) auction process, which performs better than both. Our experiments demonstrate that the RAD auction achieves higher efficiencies, lower bidder losses, higher net revenues, and faster times to completion without increasing the complexity of a bidder's problem.
© 2005 INFORMS. Received: May 22, 2002. Published Online: March 1, 2005. The authors thank the associate editor and two anonymous referees for careful, constructive reviews. The authors thank Elena Katok, Evan Kwerel, Paul Milgrom, Charles Plott, and Rakesh Vohra for their helpful comments. This is a significantly revised version of DeMartini et al. (1999).