Optimal deterministic auctions with correlated priors

Christos Papadimitriou and George Pierrakos

Games and Economic Behavior, 2015, vol. 92, issue C, 430-454

Abstract: We revisit the problem of designing the profit-maximizing single-item auction, solved by Myerson in his seminal paper for the case in which bidder valuations are independently distributed. We focus on general joint distributions, either discrete or Lipschitz-continuous, seeking the optimal deterministic incentive compatible auction. We give a geometric characterization of the optimal auction, resulting in a duality theorem and an efficient algorithm for finding the optimal deterministic auction in the two-bidder case and an NP-completeness result for three or more bidders.

Keywords: Revenue-maximizing auction design; Correlated priors; Approximation algorithms; Computational complexity (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:92:y:2015:i:c:p:430-454

DOI: 10.1016/j.geb.2013.08.009

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