Optimal Deterministic Auctions with Correlated Priors
Christos Papadimitriou, George Pierrakos
TL;DR
This paper explores the design of optimal deterministic auctions with correlated bidder valuations, providing geometric characterizations, an efficient algorithm for two bidders, and complexity results for more bidders.
Contribution
It introduces a geometric framework for correlated valuations, offers an efficient algorithm for two bidders, and proves NP-completeness for three or more bidders.
Findings
Geometric characterization of optimal auctions
Efficient algorithm for two bidders
NP-completeness for three or more bidders
Abstract
We revisit the problem of designing the profit-maximizing single-item auction, solved by Myerson in his seminal paper for the case in which bidder valuations are independently distributed. We focus on general joint distributions, seeking the optimal deterministic incentive compatible auction. We give a geometric characterization of the optimal auction, resulting in a duality theorem and an efficient algorithm for finding the optimal deterministic auction in the two-bidder case and an NP-completeness result for three or more bidders.
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