Designing revenue optimal auctions for selling an item to n symmetric bidders is a fundamental problem in mechanism design. Myerson (1981) shows that the second price auction with an appropriate reserve price is optimal when bidders\u2019 values are drawn i.i.d. from a known regular distribution. A cornerstone in the prior-independent revenue maximization literature is a result by Bulow and Klemperer (1996) showing that the second price auction without a reserve achieves (n \u2212 1)\/n of the optimal revenue in the worst case.<\/p>\n
We construct a randomized mechanism that strictly outperforms the second price auction in this setting. Our mechanism inflates the second highest bid with a probability that varies with n. For two bidders we improve the performance guarantee from 0.5 to 0.512 of the optimal revenue. We also resolve a question in the design of revenue optimal mechanisms that have access to a single sample from an unknown distribution. We show that a randomized mechanism strictly outperforms all deterministic mechanisms in terms of worst case guarantee.<\/p>\n","protected":false},"excerpt":{"rendered":"
Designing revenue optimal auctions for selling an item to n symmetric bidders is a fundamental problem in mechanism design. Myerson (1981) shows that the second price auction with an appropriate reserve price is optimal when bidders\u2019 values are drawn i.i.d. from a known regular distribution. A cornerstone in the prior-independent revenue maximization literature is a […]<\/p>\n","protected":false},"featured_media":0,"template":"","meta":{"msr-url-field":"","msr-podcast-episode":"","msrModifiedDate":"","msrModifiedDateEnabled":false,"ep_exclude_from_search":false,"_classifai_error":"","footnotes":""},"msr-content-type":[3],"msr-research-highlight":[],"research-area":[13548,13546],"msr-publication-type":[193716],"msr-product-type":[],"msr-focus-area":[],"msr-platform":[],"msr-download-source":[],"msr-locale":[268875],"msr-post-option":[],"msr-field-of-study":[],"msr-conference":[],"msr-journal":[],"msr-impact-theme":[],"msr-pillar":[],"class_list":["post-318974","msr-research-item","type-msr-research-item","status-publish","hentry","msr-research-area-economics","msr-research-area-computational-sciences-mathematics","msr-locale-en_us"],"msr_publishername":"","msr_edition":"ACM Conference on Electronic Commerce 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