Multi-unit Auctions with Budget Constraints

Details Multi-unit Auctions with Budget Constraints Multi-unit Auctions with Budget Constraints

2009-03-08

arxiv.org/abs/0903.1450v2

Computer Science

Computer Science and Game Theory

Scientific paper

Motivated by sponsored search auctions, we study multi-unit auctions with budget constraints. In the mechanism we propose, Sort-Cut, understating budgets or values is weakly dominated. Since Sort-Cut's revenue is increasing in budgets and values, all kinds of equilibrium deviations from true valuations turn out to be beneficial to the auctioneer. We show that the revenue of Sort-Cut can be an order of magnitude greater than that of the natural Market Clearing Price mechanism, and we discuss the efficiency properties of its ex-post Nash equilibrium.

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