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Efficient Dynamic Auctions

Author

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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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    File URL: http://cowles.econ.yale.edu/P/cd/d15b/d1584.pdf
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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. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    3. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 341-388.
    4. Susan Athey & Ilya Segal, 2013. "An Efficient Dynamic Mechanism," Econometrica, Econometric Society, vol. 81(6), pages 2463-2485, November.
    5. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 173-191.
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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. Gershkov, Alex & Moldovanu, Benny, 2007. "The Dynamic Assignment of Heterogenous Objects: A Mechanism Design Approach," CEPR Discussion Papers 6439, C.E.P.R. Discussion Papers.
    4. 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.

    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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