Electronic service matching: Failure of incentive compatibility in Vickrey auctions

Publication Type
Journal contribution (peer reviewed)
Authors
Widmer, T.; Leukel, J.
Year of publication
2018
Published in
Operations Research Letters
Band/Volume
46/3
DOI
10.1016/j.orl.2018.03.004
Page (from - to)
318-323
Abstract

We consider pricing schemes for matching customers and providers on double-sided markets for electronic services. While existing second-best solutions are incentive compatible, the associated payment functions are difficult to implement in real-world settings. Based on the Vickrey-Clarke-Groves (VCG) and the k-pricing mechanism, we propose two straightforward payment schemes that offer a practical alternative to the second-best solution. Our experiments provide evidence that the VCG payments fail to implement incentive compatibility. This failure is due to the interdependency of the participants' utilities.

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