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Optimal Search Auctions

Jacques Crémer (), Yossi Spiegel and Charles Zheng

No 1421, Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

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 bidders’ types and possibly interdependent valuations, the seller’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.

Keywords: optimal auctions; search cost; search mechanism (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-gth
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Related works:
Journal Article: Optimal search auctions (2007) Downloads
Working Paper: Optimal Search Auctions (2007)
Working Paper: Optimal Search Auctions (2005) Downloads
Working Paper: Optimal search auctions (2004) Downloads
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