Optimal multi-object auctions

This paper analyses optimal auctions of several objects. In the first model bidders have a binary distribution over their valuations for each object, in which case the optimal auction is efficient. The optimal auction takes o ne of two formats: either objects are sold in independent auctions, or a de gree of bundling is introduced in the sense that the probability a bidder w ins one object is increasing in her value for the other. The format of the optimal auction may depend upon the number of bidders. In the second model the restriction to binary distributions is relaxed, and the optimal auction is then inefficient.