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Optimal Search Auctions

Crémer, Jacques, Yossi Spiegel and Charles Zheng

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We study the design of profit maximizing single unit auctions under the assumption that the seller needs to incur costs to contact prospective bidders and inform them about the auction. With independent biddersï¾’ types and possibly interdependent valuations, the sellerï¾’s problem can be reduced to a search problem in which the surplus is measured in terms of virtual utilities minus search costs. Compared to the socially efficient mechanism, the optimal mechanism features fewer participants, longer search conditional on the same set of participants, and inefficient sequence of entry.

Date: 2007-05-01
New Economics Papers: this item is included in nep-com, nep-fmk and nep-gth
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Published in Journal of Economic Theory, May 2007, vol. 134 no. 1, pp. 226-248

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:12662

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