Browsing by Subject "Optimal auction design"

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Open Access
Generalized second price auction is optimal for discrete types
(Elsevier, 2016) Bayrak, H. I.; Pınar, M. Ç.
We prove that a variant of the second price auction for the sale of a single good through a Bayesian incentive compatible mechanism that maximizes expected revenue of the seller is optimal when the type space is discrete. Moreover, we show that this variant is related to the widely used generalized second price auction mechanism in keyword-auctions for advertising, thus providing a theoretical justification for a practical tool.
Open Access
Robust auction design under multiple priors by linear and integer programming
(Springer New York LLC, 2018) Koçyiğit, Ç.; Bayrak, Halil İbrahim; Pınar, Mustafa Çelebi
It is commonly assumed in the optimal auction design literature that valuations of buyers are independently drawn from a unique distribution. In this paper we study auctions under ambiguity, that is, in an environment where valuation distribution is uncertain itself, and present a linear programming approach to robust auction design problem with a discrete type space. We develop an algorithm that gives the optimal solution to the problem under certain assumptions when the seller is ambiguity averse with a finite prior set P and the buyers are ambiguity neutral with a prior f∈ P. We also consider the case where all parties, the buyers and the seller, are ambiguity averse, and formulate this problem as a mixed integer programming problem. Then, we propose a hybrid algorithm that enables to compute an optimal solution for the problem in reduced time.