Auctions with Dynamic Populations: Efficiency and Revenue Maximization

ABSTRACT: We examine an environment where goods and privately informed buyers arrive stochastically to a market. A seller in this setting faces a sequential allocation problem with a changing population. We characterize the set of incentive compatible allocation rules and provide a generalized revenue equivalence result. In contrast to a static setting where incentive compatibility implies that higher-valued buyers have a greater likelihood of receiving an object, in this dynamic setting, incentive compatibility implies that highervalued buyers have a greater likelihood of receiving an object sooner. We also characterize the set of efficient allocation rules and show that a dynamic VickreyClarke-Groves mechanism is efficient and dominant strategy incentive compatible. We then derive an optimal direct mechanism. We show that the revenue-maximizing direct mechanism is a pivot mechanism with a reserve price. Finally, we consider sequential ascending auctions in this setting, both with a...

• Type: Conference
• Year: 2009
• Where: AMMA
• Authors: Maher Said
• Keywords: AMMA 2009, Direct Mechanisms, Incentive Compatible, Internet Technology, Sequential Ascending Auction