The Lovely but Lonely Vickrey Auction
Combinatorial Auctions, chapter 1, MIT Press, (2006)Abstract
William Vickrey's (1961) inquiry into auctions and ``counterspeculation''
marked the first serious attempt by an economist to analyze the details
of market rules and to design new rules to achieve superior performance.
He demonstrated that a particular pricing rule makes it a dominant
strategy for bidders to report their values truthfully, even when
they know that their reported values will be used to allocate goods
efficiently. Vickreys discovery was largely ignored for a decade,
but the floodgates have since opened. Dozens of studies have extended
his design to new environments, developed his associated theory of
bidding in auctions, and tested its implications using laboratory
experiments and field data.