Generalized second price auction is optimal for discrete types

Date

2016

Authors

Bayrak, H. I.
Pınar, M. Ç.

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Abstract

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.

Source Title

Economics Letters

Publisher

Elsevier

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Citation

Published Version (Please cite this version)

Language

English