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Optimal deterministic auctions with correlated priors

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  • Papadimitriou, Christos
  • Pierrakos, George

Abstract

We revisit the problem of designing the profit-maximizing single-item auction, solved by Myerson in his seminal paper for the case in which bidder valuations are independently distributed. We focus on general joint distributions, either discrete or Lipschitz-continuous, seeking the optimal deterministic incentive compatible auction. We give a geometric characterization of the optimal auction, resulting in a duality theorem and an efficient algorithm for finding the optimal deterministic auction in the two-bidder case and an NP-completeness result for three or more bidders.

Suggested Citation

  • Papadimitriou, Christos & Pierrakos, George, 2015. "Optimal deterministic auctions with correlated priors," Games and Economic Behavior, Elsevier, vol. 92(C), pages 430-454.
    • Handle: RePEc:eee:gamebe:v:92:y:2015:i:c:p:430-454
    DOI: 10.1016/j.geb.2013.08.009
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    References listed on IDEAS

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    More about this item

    Keywords

    Revenue-maximizing auction design; Correlated priors; Approximation algorithms; Computational complexity;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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