Experimental Analysis of the Relative Efficiency of Alternative Assignment Auction Formats

摘要

To induce Sailors to volunteer for hard-to-fill assignments the Navy employs an auction. With respect to the optimal assignment auction format; however, there is only very limited academic literature. To match Sailors with qualified bidders, non-bid factors must be reflected in the assignment. The greater the weight placed on those factors, the lower the weight placed on the bid and hence the weaker the Sailor's incentive to bid near his reservation wage. This requirement precludes the implementation of an incentive compatible assignment auction (Leonard, 1983). This report relaxes the assumption that the bid amounts alone determine the assignment set and experimentally estimates the efficiency reductions associated with decreased bid weights. The estimated elasticity of payment to changes in the bid weight in a low-contention, first- price auction, with a bid weight of 10% is -0.34. The effect of the contention level (i.e., the ratio of bidders to jobs) is identified as well. A third consideration is whether a first or a Modified Vickrey-Leonard (VL) auction offers smaller efficiency reductions when the assumption of 100% bid weight is relaxed.