A qualitative vickrey auction

Restricting the preferences of the agents by assuming that their utility functions linearly depend on a payment allows for the positive results of the Vickrey auction and the Vickrey-Clarke-Groves mechanism. These results, however, are limited to settings where there is some commonly desired commodity or numeraire--money, shells, beads, etcetera--which is commensurable with utility. We propose a generalization of the Vickrey auction that does not assume that the agents' preferences are quasilinear, but nevertheless retains some of the Vickrey auction's desirable properties. In this auction, a bid can be any alternative, rather than just a monetary offer. As a consequence, the auction is also applicable to situations where there is a fixed budget, or no numeraire is available at all (or it is undesirable to use payments for other reasons)--such as, for example, in the allocation of the task of contributing a module to an open-source project. We show that in two general settings, this qualitative Vickrey auction has a dominant-strategy equilibrium, invariably yields a weakly Pareto efficient outcome in this equilibrium, and is individually rational. In the first setting, the center has a linear preference order over a finite set of alternatives, and in the second setting, the bidders' preferences can be represented by continuous utility functions over a closed metric space of alternatives and the center's utility is equipeaked. The traditional Vickrey auction turns out to be a special case of the qualitative Vickrey auction in this second setting.

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