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The Dynamic Vickrey Auction

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  • Mierendorff, Konrad
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    Abstract

    We study the efficient allocation of a single object over a finite time horizon. Buyers arrive randomly over time, are long-lived, and have independent private values. The valuation of a buyer may depend on the time of the allocation in an arbitrary way. We construct an incentive compatible mechanism in which (A) there is a single financial transaction (with the buyer), (B) ex-post participation constraints are fulfilled, (C) there is no positive transfer to any agent and (D) payments are determined online. We exploit that under the efficient allocation rule, there is a unique potential winning period for each buyer. This reduces the multidimensional type to one dimension and the payment of the winner can be defined as the lowest valuation for the potential winning period, with which the buyer would have won the object. In a static model, this payment rule coincides with the payment rule of the Vickrey Auction.

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    Bibliographic Info

    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 82 (2013)
    Issue (Month): C ()
    Pages: 192-204

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    Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:192-204

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    Web page: http://www.elsevier.com/locate/inca/622836

    Related research

    Keywords: Dynamic allocation problem; Efficiency; Auction; Multidimensional types;

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    References

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    1. Jehiel, Phillipe & Moldovanu, Benny & Stacchetti, E., 1997. "Multidimensional Mechanism Design for Auctions with Externalities," Sonderforschungsbereich 504 Publications 97-04, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    2. Susan Athey & Ilya Segal, 2007. "An Efficient Dynamic Mechanism," Levine's Bibliography 122247000000001134, UCLA Department of Economics.
    3. Dirk Bergemann & Juuso Välimäki, 2008. "The Dynamic Pivot Mechanism," Levine's Working Paper Archive 122247000000002340, David K. Levine.
    4. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, 09.
    5. Alex Gershkov & Benny Moldovanu, 2009. "Learning about the Future and Dynamic Efficiency," American Economic Review, American Economic Association, vol. 99(4), pages 1576-87, September.
    6. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    7. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
    8. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
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