A two-dimensional problem of revenue maximization

Omer Lev

Journal of Mathematical Economics, 2011, vol. 47, issue 6, 718-727

Abstract: We consider the problem of finding the mechanism that maximizes the revenue of a seller of multiple objects. This problem turns out to be significantly more complex than the case where there is only a single object (which was solved by Myerson, 1981). The analysis is difficult even in the simplest case studied here, where there are two exclusive objects and a single buyer, with valuations uniformly distributed on triangular domains. We show that the optimal mechanisms are piecewise linear with either 2 or 3 pieces, and obtain explicit formulas for most cases of interest.

Keywords: Auctions; Multi-dimensional mechanism design; Incentive compatibility; Mechanism design (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:47:y:2011:i:6:p:718-727

DOI: 10.1016/j.jmateco.2011.08.007

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