Generalized second price auction is optimal for discrete types

摘要

We prove that a variant of the second price auction for the sale of a single good through a Bayesian incentive compatible mechanism that maximizes expected revenue of the seller is optimal when the type space is discrete. Moreover, we show that this variant is related to the widely used generalized second price auction mechanism in keyword-auctions for advertising, thus providing a theoretical justification for a practical tool. (C) 2016 Elsevier B.V. All rights reserved.