Implementing Optimal Outcomes through Sequential Auctions

72 Pages Posted: 24 Jan 2017 Last revised: 6 Sep 2022

See all articles by Fanqi Shi

Fanqi Shi

School of Economics, Peking University

Yiqing Xing

Johns Hopkins University - Carey Business School

Date Written: May 30, 2022

Abstract

We study sequential auctions as optimal mechanisms for selling multiple heterogeneous items to unit-demand buyers. We find that as long as the items can be ordered in decreasing variation of the buyers' values, any combination of static standard auctions in this sequence achieves full efficiency and the constrained optimal revenue, subject to (BIC), (IIR) and the all-sold constraint. In addition, with increasing threshold types and optimal static reserve prices, any l-th price auctions in the same sequence can achieve the optimal revenue subject to (BIC) and (IIR). Our results have implications for practical auction design, such as sponsored search auctions.

Keywords: Optimal mechanism; Sequential auction; Sponsored search auction; Reserve price; Disclosure

JEL Classification: D44, D82

Suggested Citation

Shi, Fanqi and Xing, Yiqing, Implementing Optimal Outcomes through Sequential Auctions (May 30, 2022). RAND Journal of Economics, Forthcoming, Johns Hopkins Carey Business School Research Paper No. 17-10, Available at SSRN: https://ssrn.com/abstract=2903354 or http://dx.doi.org/10.2139/ssrn.2903354

Fanqi Shi

School of Economics, Peking University ( email )

No. 5 Yi Heyuan Road
Beijing, 100871
China
+8613520791730 (Phone)

Yiqing Xing (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://yiqingxing.com

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