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The Dynamic Vickrey Auction

  • Mierendorff, Konrad
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    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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    File URL: http://www.sciencedirect.com/science/article/pii/S0899825613001061
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    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
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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    1. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, 09.
    2. 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.
    3. Dirk Bergemann & Juuso Valimaki, 2008. "The Dynamic Pivot Mechanism," Cowles Foundation Discussion Papers 1672, Cowles Foundation for Research in Economics, Yale University.
    4. Susan Athey & Ilya Segal, 2007. "An Efficient Dynamic Mechanism," Levine's Bibliography 122247000000001134, UCLA Department of Economics.
    5. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
    6. 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.
    7. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    8. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
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