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Optimal mechanisms for an auction mediator

  • Matros, Alexander
  • Zapechelnyuk, Andriy

We consider a dynamic auction environment with a long-lived seller and short-lived buyers mediated by a third party. A mediator has incomplete information about traders' values and selects an auction mechanism to maximize her expected revenue. We characterize mediator-optimal mechanisms and show that an optimal mechanism has a simple implementation as a Vickrey auction with a reserve price where the seller pays to the mediator only a fixed percentage from the closing price.

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Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 4 (July)
Pages: 426-431

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Handle: RePEc:eee:indorg:v:29:y:2011:i:4:p:426-431
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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