Electronic service matching: Failure of incentive compatibility in Vickrey auctions

Publikations-Art

Zeitschriftenbeitrag (peer-reviewed)

Autoren

Widmer, T.; Leukel, J.

Erscheinungsjahr

2018

Veröffentlicht in

Operations Research Letters

Band/Volume

46/3

DOI

10.1016/j.orl.2018.03.004

Seite (von - bis)

318-323

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.