2010/05/06 by Vineet Abhishek, Abhishek, Vineet, Bruce Hajek +1
Computer Science · #Computer Science and Game Theory (cs.GT) #FOS: Computer and information sciences #cs.GT
paper · pdf · doi:10.48550/arxiv.1005.1059
19 pages, 2 figures. A short version of this will appear in the 49th IEEE Conference on Decision and Control (CDC), 2010
arxiv created 2010/09/13 · arxiv updated 2010/09/14
We study the problem of characterizing revenue optimal auctions for single-minded buyers. Each buyer is interested only in a specific bundle of items and has a value for the same. Both his bundle and its value are his private information. The bundles that buyers are interested in and their corresponding values are assumed to be realized from known probability distributions independent across the buyers. We identify revenue optimal auctions with a simple structure, if the conditional distribution of any buyer's valuation is nondecreasing, in the hazard rates ordering of probability distributions, as a function of the bundle the buyer is interested in. The revenue optimal auction is given by the solution of a maximum weight independent set problem. We provide a novel graphical construction of the weights and highlight important properties of the resulting auction.