2009/03/08 by Hafalir, I., Ravi, R., Sayedi, A.
#Computer Science and Game Theory (cs.GT) #F.2.2 #FOS: Computer and information sciences
paper · doi:10.48550/arxiv.0903.1450
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.