Incentives in core-selecting auctions with single-minded bidders

This paper considers some package auctions with known single-minded bidders. A single-minded bidder is interested in a unique bundle of goods and bids only for that bundle. We examine each bidderʼs incentive in Ausubel and Milgromʼs (2002) ascending proxy auction and every bidder-optimal core-selecting auction. We provide a simple condition for each bidder to report his valuation truthfully, which can be expressed in a single sentence—any “rival” of my “rivals” is my “rival.” The Vickrey outcome lies in the core if and only if this condition holds for every bidder; however, it is rarely satisfied. ► We consider some core-selecting auctions with single-minded bidders. ► Each bidder reports truthfully if and only if any rival of his rivals is his rival. ► It is quite rare that every bidder satisfies the condition for truthful reporting.