An Efficient and Incentive‐Compatible Dynamic Multi‐Item Auction Under Budget Constraints

ABSTRACT This paper proposes an efficient and incentive‐compatible dynamic auction for selling multiple heterogeneous indivisible goods when bidders have unit demand, quasi‐linear preferences, and hard budgets. Valuations and budgets are private information. The auction generates an efficient outcome that is not only in the core but also strongly Pareto efficient. When no bidder is budget‐constrained, the auction returns a Walrasian equilibrium with the minimal equilibrium prices.