The Duo-Item Bisection Auction

This paper proposes an iterative sealed-bid auction for selling multiple heterogeneous items to bidders interested in buying at most one item. It generalizes the single item bisection auction (Grigorieva et al. Econ Theory, 30:107–118, 2007) to the environment with multiple heterogeneous items. We focus on the case with two items for sale. We show that the auction elicits a minimal amount of information on preferences required to find the Vickrey–Clark–Groves outcome (Clarke, Public Choice, XI:17–33, 1971; Groves, Econometrica, 61:617–631, 1973; Vickrey, J Finance, 16:8–37, 1961), when there are two items for sale and an arbitrary number of bidders.