Implementing optimal outcomes through sequential auctions

Fanqi Shi and Yiqing Xing

RAND Journal of Economics, 2022, vol. 53, issue 4, 703-732

Abstract: We study sequential auctions as optimal mechanisms for selling multiple heterogeneous items to unit‐demand buyers. We find that as long as the items can be ordered in decreasing variation of the buyers' values, any combination of static standard auctions in this sequence achieves full efficiency and the constrained optimal revenue, subject to (BIC), (IIR), and the all‐sold constraint. In addition, with increasing threshold types and optimal static reserve prices, any l‐th price auctions in the same sequence can achieve the optimal revenue subject to (BIC) and (IIR). Our results have implications for practical auction design, such as sponsored search auctions.

Date: 2022
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https://doi.org/10.1111/1756-2171.12423

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