Subsidies, knapsack auctions and Dantzig's greedy heuristic

Arbeitspapier

A budget-constrained buyer wants to purchase items from a shortlisted set. Items are differentiated by quality and sellers have private reserve prices for their items. Sellers quote prices strategically, inducing a knapsack game. The buyer's problem is to select a subset of maximal quality. We propose a buying mechanism which can be viewed as a game theoretic extension of Dantzig's greedy heuristic for the classic knapsack problem. We use Monte Carlo simulations to analyse the performance of our mechanism. Finally, we discuss how the mechanism can be applied to award R&D subsidies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 880

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Auctions ; Rationing; Licensing
• Subject: Auctions ; subsidies ; market design ; knapsack problem ; Beschaffung ; Auktionstheorie ; Ganzzahlige Optimierung ; Spieltheorie ; Mechanism ; Theorie ; Forschungssubvention ; Klein- und Mittelunternehmen ; Monte-Carlo-Methode ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ensthaler, Ludwig ; Giebe, Thomas
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/29739
• Last update: 10.03.2025, 11:45 AM CET