The Mechanism Design of Multi-attribute Auctions

In this paper we consider an extension of the traditional auction mechanism, the multi-attribute auction, which enables negotiation on several attributes in addition to the price of the item. In particular, we consider a procurement auction in which the buyer is the auctioneer and the sellers are the bidders. We set up the model of multi-attribute auctions where sellers bid on price and the other attributes, and bids are evaluated by a scoring rule designed by the buyer. We educe the optimal auction mechanism by analyzing the incentive compatibility. In addition, we find that the optimal attributes are chosen independently of the price and the sellerpsilas beliefs about the other participants, so we get the optimal score rule and an extension of the equivalence theory of the single attribute for the case of multi-attribute auctions. Finally, we implement the optimal mechanism by three auctions: the first-score-sealed-bid auction, the second-score sealed-bid auction and the English auction.