Abstract. We design the revenue-maximizing auction for two objects when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the objects inefficiently with respect to an environment with no synergies (see Armstrong, RES (2000)). In particular, the objects may be bundled too rarely or a buyer may win the bundle even though her valuations for the goods are weakly dominated by the values of another buyer.
Optimal two-object auctions with synergies / Domenico Menicucci. - In: REVIEW OF ECONOMIC DESIGN. - ISSN 1434-4742. - STAMPA. - 8:(2003), pp. 143-164. [10.1007/s10058-003-0096-9]
Optimal two-object auctions with synergies
MENICUCCI, DOMENICO
2003
Abstract
Abstract. We design the revenue-maximizing auction for two objects when each buyer has bi-dimensional private information and a superadditive utility function (i.e., a synergy is generated if a buyer wins both goods). In this setting the seller is likely to allocate the objects inefficiently with respect to an environment with no synergies (see Armstrong, RES (2000)). In particular, the objects may be bundled too rarely or a buyer may win the bundle even though her valuations for the goods are weakly dominated by the values of another buyer.
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