Academic Journal
Optimal Auction Design with Deferred Inspection and Reward.
| Τίτλος: | Optimal Auction Design with Deferred Inspection and Reward. |
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| Συγγραφείς: | Alaei, Saeed1 (AUTHOR) saeed.a@gmail.com, Belloni, Alexandre2,3 (AUTHOR) alexandre.belloni@duke.edu, Makhdoumi, Ali3 (AUTHOR) ali.makhdoumi@duke.edu, Malekian, Azarakhsh4 (AUTHOR) azarakhsh.malekian@rotman.utoronto.ca |
| Πηγή: | Operations Research. Nov/Dec2024, Vol. 72 Issue 6, p2413-2429. 17p. |
| Θεματικοί όροι: | *Auctioneers, *Revenue management, *Data analytics, Calculus of variations, Continuous functions |
| Περίληψη: | In a variety of auction contexts, particularly those facilitated by digital marketplaces, auctioneers are now empowered to review the valuations submitted by purchasers and modify the final payments accordingly. Alaei et al. formulate and study the optimal design of such auctions, demonstrating that both the analysis and implementation vastly depart from classical settings. In particular, the analysis requires tools from convex analysis and the calculus of variations, which could be of independent interest in other mechanism design questions. Consider a mechanism run by an auctioneer who can use both payment and inspection instruments to incentivize agents. The timeline of the events is as follows. Based on a prespecified allocation rule and the reported values of agents, the auctioneer allocates the item and secures the reported values as deposits. The auctioneer then inspects the values of agents and, using a prespecified reward rule, rewards the ones who have reported truthfully. Using techniques from convex analysis and calculus of variations, for any distribution of values, we fully characterize the optimal mechanism for a single agent. Using Border's theorem and duality, we find conditions under which our characterization extends to multiple agents. Interestingly, the optimal allocation function, unlike the classic settings without inspection, is not a threshold strategy and instead is an increasing and continuous function of the types. We also present an implementation of our optimal auction and show that it achieves a higher revenue than auctions in classic settings without inspection. This is because the inspection enables the auctioneer to charge payments closer to the agents' true values without creating incentives for them to deviate to lower types. Supplemental Material: The online appendix is available at https://doi.org/10.1287/opre.2020.0651. [ABSTRACT FROM AUTHOR] |
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