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Title: Threshold Mechanisms for Dynamic Procurement with Abandonment
We study a dynamic model of procurement auctions in which the agents (sellers) will abandon the auction if their utility does not satisfy their private target, in any given round. We call this “abandonment” and analyze its consequences on the overall cost to the mechanism designer (buyer), as it reduces competition in future rounds of the auction and drives up the price. We show that in order to maintain competition and minimize the overall cost, the mechanism designer has to adopt an inefficient (per-round) allocation, namely to assign the demand to multiple agents in a single round. We focus on threshold mechanisms as a simple way to achieve ex-post incentive compatibility, akin to reserves in revenue-maximizing forward auctions. We then consider the optimization problem of finding the optimal thresholds. We show that even though our objective function does not have the optimal substructure property in general, if the underlying distributions satisfy some regularity properties, the global optimal solution lies within a region where the optimal thresholds are monotone and can be calculated with a greedy approach, or even more simply in a parallel fashion.  more » « less
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Author(s) / Creator(s):
; ; ;
Deligkas, Argyrios; Filos-Ratsikas, Aris
Publisher / Repository:
Springer Nature Switzerland AG
Date Published:
Journal Name:
Lecture notes in computer science
Medium: X
Egham, UK
Sponsoring Org:
National Science Foundation
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