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A Dynamic Mechanism Design with Overbooking, Different Deadlines, and Multi-unit Demands

Ryuji Sano

No 963, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper considers a dynamic mechanism design in which multiple objects with different consumption deadlines are allocated over time. Agents arrive over time and may have multi-unit demand. We characterize necessary and sufficient condition for periodic ex-post incentive compatibility and provide the optimal mechanism that maximizes the seller's expected revenue under regularity conditions. When complete contingent-contracts are available, the optimal mechanism can be interpreted as an "overbooking" mechanism. The seller utilizes overbooking for screening and price-discriminating advance agents. When agents demand multiple objects as complements, the seller may face a tradeoff between the last-minute price of the current object and the future profit.

Keywords: dynamic mechanism design; optimal auction; overbooking; price discrimination; revenue management (search for similar items in EconPapers)
JEL-codes: D82 D44 (search for similar items in EconPapers)
Pages: 41pages
Date: 2017-02
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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