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Efficient Dynamic Auctions

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  • Dirk Bergemann
  • Juuso Välimäki

Abstract

We consider the truthful implementation of the socially efficient allocation in a dynamic private value environment in which agents receive private information over time. We show that a suitable generalization of the Vickrey-Clark-Groves mechanism, based on the marginal contribution of each agent, leads to truthtelling in every period. A leading example of a dynamic allocation model is the sequential auction of a single good in which the current winner of the object receives additional information about her valuation. We show that a modified sequential second price auction in which only the current winner makes a positive payment leads to truthtelling. In general allocation problems, the marginal contribution mechanism continues to induce truthtelling in every period but may now include positive transfers for many agents.
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Suggested Citation

  • Dirk Bergemann & Juuso Välimäki, 2006. "Efficient Dynamic Auctions," Levine's Bibliography 321307000000000580, UCLA Department of Economics.
    • Handle: RePEc:cla:levrem:321307000000000580
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    References listed on IDEAS

    as
    1. Bergemann, Dirk & Valimaki, Juuso, 2003. "Dynamic common agency," Journal of Economic Theory, Elsevier, vol. 111(1), pages 23-48, July.
    2. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 173-191.
    3. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    5. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 341-388.
    6. Susan Athey & Ilya Segal, 2013. "An Efficient Dynamic Mechanism," Econometrica, Econometric Society, vol. 81(6), pages 2463-2485, November.
    7. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Cited by:

    1. Francis Bloch & David Cantala, 2013. "Markovian assignment rules," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(1), pages 1-25, January.
    2. Gershkov, Alex & Moldovanu, Benny, 2010. "Efficient sequential assignment with incomplete information," Games and Economic Behavior, Elsevier, vol. 68(1), pages 144-154, January.
    3. moldovanu, benny & Gershkov, Alex, 2007. "The Dynamic Assignment of Heterogenous Objects: A Mechanism Design Approach," CEPR Discussion Papers 6439, C.E.P.R. Discussion Papers.
    4. Bharadwaj Satchidanandan & Munther A. Dahleh, 2022. "Incentive Compatibility in Two-Stage Repeated Stochastic Games," Papers 2203.10206, arXiv.org, revised Oct 2022.
    5. Chassang, Sylvain & Kapon, Samuel, 2022. "Prior-free dynamic allocation under limited liability," Theoretical Economics, Econometric Society, vol. 17(3), July.
    6. Hamid Nazerzadeh & Amin Saberi & Rakesh Vohra, 2007. "Dynamic Cost-Per-Action Mechanisms and Applications to Online Advertising," Discussion Papers 1450, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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