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Buy-it-now or Take-a-chance: Price Discrimination through Randomized Auctions
, 2012
"... Increasingly detailed consumer information makes sophisticated price discrimination possible. At fine levels of aggregation, demand may not obey standard regularity conditions. We propose a new randomized sales mechanism for such environments. Bidders can “buy-it-now ” at a posted price, or “take-a- ..."
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Increasingly detailed consumer information makes sophisticated price discrimination possible. At fine levels of aggregation, demand may not obey standard regularity conditions. We propose a new randomized sales mechanism for such environments. Bidders can “buy-it-now ” at a posted price, or “take-a-chance ” in an auction where the top d> 1 bidders are equally likely to win. The randomized allocation incentivizes high valuation bidders to buy-it-now. We analyze equilibrium behavior, and apply our analysis to advertiser bidding data from Microsoft Advertising Exchange. In counterfactual simulations, our mechanism increases revenue by 4.4 % and consumer surplus by 14.5 % compared to an optimal second-price auction.
Bidding with limited statistical knowledge in online auctions. W-PIN+NetEcon: The joint
- Workshop on Pricing and Incentives in Networks and Systems
, 2013
"... ABSTRACT We consider online auctions from the point of view of a single bidder who has an average budget constraint. By modeling the rest of the bidders through a probability distribution (often referred to as the mean-field approximation), we develop a simple bidding strategy which can be implemen ..."
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ABSTRACT We consider online auctions from the point of view of a single bidder who has an average budget constraint. By modeling the rest of the bidders through a probability distribution (often referred to as the mean-field approximation), we develop a simple bidding strategy which can be implemented without any statistical knowledge of bids, valuations, and query arrival processes. The key idea is to use stochastic approximation techniques to automatically track long-term averages.
