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The Dynamic Vickrey Auction

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  • Mierendorff, Konrad

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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  • Mierendorff, Konrad, 2013. "The Dynamic Vickrey Auction," Games and Economic Behavior, Elsevier, vol. 82(C), pages 192-204.
    • Handle: RePEc:eee:gamebe:v:82:y:2013:i:c:p:192-204
    DOI: 10.1016/j.geb.2013.07.004
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    References listed on IDEAS

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    1. Dirk Bergemann & Juuso V‰lim‰ki, 2010. "The Dynamic Pivot Mechanism," Econometrica, Econometric Society, vol. 78(2), pages 771-789, March.
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    3. Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1999. "Multidimensional Mechanism Design for Auctions with Externalities," Journal of Economic Theory, Elsevier, vol. 85(2), pages 258-293, April.
    4. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    5. Susan Athey & Ilya Segal, 2013. "An Efficient Dynamic Mechanism," Econometrica, Econometric Society, vol. 81(6), pages 2463-2485, November.
    6. Alex Gershkov & Benny Moldovanu, 2009. "Learning about the Future and Dynamic Efficiency," American Economic Review, American Economic Association, vol. 99(4), pages 1576-1587, September.
    7. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    8. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, September.
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    Cited by:

    1. Thomas D. Jeitschko & Pallavi Pal, 2021. "Curbing Price Fluctuations in Cap-and-Trade Auctions," CESifo Working Paper Series 9266, CESifo.
    2. Mierendorff, Konrad, 2016. "Optimal dynamic mechanism design with deadlines," Journal of Economic Theory, Elsevier, vol. 161(C), pages 190-222.
    3. Dirk Bergemann & Juuso Välimäki, 2019. "Dynamic Mechanism Design: An Introduction," Journal of Economic Literature, American Economic Association, vol. 57(2), pages 235-274, June.
    4. Bergemann, Dirk & V�lim�ki, Juuso, 2017. "Dynamic Mechanism Design: An Introduction," CEPR Discussion Papers 12240, C.E.P.R. Discussion Papers.
    5. Liu, Heng, 2018. "Efficient dynamic mechanisms in environments with interdependent valuations: the role of contingent transfers," Theoretical Economics, Econometric Society, vol. 13(2), May.

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    More about this item

    Keywords

    Dynamic allocation problem; Efficiency; Auction; Multidimensional types;
    All these keywords.

    JEL classification:

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

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