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Bayesian Optimal Auctions via Multi to Singleagent Reduction
, 1203
"... We study an abstract optimal auction problem for a single good or service. This problem includes environments where agents have budgets, risk preferences, or multidimensional preferences over several possible configurations of the good (furthermore, it allows an agent’s budget and risk preference t ..."
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Cited by 9 (3 self)
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We study an abstract optimal auction problem for a single good or service. This problem includes environments where agents have budgets, risk preferences, or multidimensional preferences over several possible configurations of the good (furthermore, it allows an agent’s budget and risk preference to be known only privately to the agent). These are the main challenge areas for auction theory. A singleagent problem is to optimize a given objective subject to a constraint on the maximum probability with which each type is allocated, a.k.a., an allocation rule. Our approach is a reduction from multiagent mechanism design problem to collection of singleagent problems. We focus on maximizing revenue, but our results can be applied to other objectives (e.g., welfare). An optimal multiagent mechanism can be computed by a linear/convex program on interim allocation rules by simultaneously optimizing several singleagent mechanisms subject to joint feasibility of the allocation rules. For singleunit auctions, Border (1991) showed that the space of all jointly feasible interim allocation rules for n agents is a Ddimensional convex polytope which can be specified by 2D linear constraints, where D is the total number of all agents’
Optimal capacity choice and allocation in decentralized supply chains
, 2005
"... We consider a supply chain in which a single supplier with fixed capacity sells to several independent retailers or manufacturers. The retailers have private information about their individual markets (e.g., mean market demand), which influences the size of their orders to the supplier. If the sum o ..."
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Cited by 6 (1 self)
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We consider a supply chain in which a single supplier with fixed capacity sells to several independent retailers or manufacturers. The retailers have private information about their individual markets (e.g., mean market demand), which influences the size of their orders to the supplier. If the sum of all retailer orders exceeds the supplier’s capacity, the supplier uses a predeclared rule, which maps retailer’s orders to allocations. A broad class of allocation mechanisms are prone to manipulation by retailers, as shown by Cachon and Lariviere (1999). We first use a mechanismdesign approach to obtain the optimal capacityallocation rule and pricing mechanism for the supplier. We then answer the following questions: What level of capacity should the supplier provide to maximize its profit, given an implementable profitmaximizing allocation policy? What forms do optimal (i.e., supplier profitmaximizing) allocation polices take in typical business scenarios? Is supplier profit sensitive to the type of allocation policy it employs? What are practical ways of implementing the optimal allocation policy to reduce transaction costs? Our analysis examines business scenarios for which the linear and proportional allocation mechanisms are optimal. We also conclude that both supplier and supplychain profit can increase significantly if a manipulable allocation policy is replaced by the optimal truthtelling allocation policy. Finally, in order to implement the optimal allocation rule, we design an auction mechanism wherein retailers submit purchasing cost bids for supplier capacity.
Coordination and costly preference elicitation in electronic markets, doctoral thesis
, 2007
"... Electronic markets are based on classic market design assumptions that often do not hold. This thesis examines the conflict between theory and practice for the class of VickreyClarkeGroves mechanisms (VCG) and the auctions it has inspired in electronic commerce, most notably the iterative auctions ..."
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Cited by 1 (1 self)
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Electronic markets are based on classic market design assumptions that often do not hold. This thesis examines the conflict between theory and practice for the class of VickreyClarkeGroves mechanisms (VCG) and the auctions it has inspired in electronic commerce, most notably the iterative auctions found on eBay. VCG mechanisms provide bidders with an optimal strategy to truthfully reveal their valuations to the marketplace, and in so doing VCG mechanisms enable efficient allocations of goods. VCG assumes not only that consumers are able to coordinate themselves to a single market and moment in time when conducting their transactions, but also that consumers can determine and express their valuations at no cost. However, in systems like eBay, bidders and sellers are highly uncoordinated, and the market is iterative because consumers are often assumed in practice not to have a complete sense of their valuation initially, but to incur costs in order to derive better beliefs of their value. iii The theorypractice conflict is investigated through analytic and empirical analyses
Matching Markets: Design and Analysis
"... A market consists of buyers and sellers of some commodity, say a DVD movie. In this thesis, we assume the role of market operator. Our goal is to ensure that the market has certain desirable properties, which may include fairness, revenue maximization, and so on. We achieve these properties by desig ..."
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A market consists of buyers and sellers of some commodity, say a DVD movie. In this thesis, we assume the role of market operator. Our goal is to ensure that the market has certain desirable properties, which may include fairness, revenue maximization, and so on. We achieve these properties by designing
Identification and Estimation of Incentive Problems: Adverse Selection ∗
, 2007
"... The adverse selection model is a principalagent model defined by the objective function of the principal, the agents ’ utility function and the distribution of agents’ types. We prove that the nonparametric identification of this model requires the knowledge of at least one of the three functions. ..."
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The adverse selection model is a principalagent model defined by the objective function of the principal, the agents ’ utility function and the distribution of agents’ types. We prove that the nonparametric identification of this model requires the knowledge of at least one of the three functions. We also show that some exogenous changes in the objective function of the principal are sufficient to obtain partial or full nonparametric identification of the model. A nonparametric estimation procedure based on these results is proposed. We apply this method to test if firms provide the right incentives to their workers. Using contract data between the French National Institute of Statistics and its interviewers, we test and reject the contracts ’ optimality. We estimate, however, the loss of using linear contracts instead of optimal ones to be less than 10%, which may explain why these simple contracts are so popular.
Universidad Carlos
, 2009
"... We characterize the incentive compatible allocation that maximizes the expected social surplus in a singleunit sale when the efficient allocation is not implementable. We then show that allowing for the possibility that the good remains unsold may increase the expected social surplus even when allo ..."
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We characterize the incentive compatible allocation that maximizes the expected social surplus in a singleunit sale when the efficient allocation is not implementable. We then show that allowing for the possibility that the good remains unsold may increase the expected social surplus even when allocating the good to no bidder generates less social surplus than allocating to any of the bidders. Aside from this option, the English auction implements the second best allocation when there are only two bidders but not always with more than two bidders.