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Posted prices vs. negotiations: an asymptotic analysis

Published: 08 July 2008 Publication History

Abstract

The design of optimal auctions focuses on ways to negotiate with the bidders for eliciting relevant information that they hold. Sometimes, however, decisions should be made very quickly, and the auctioneer cannot allow a costly iterative procedure of negotiation or waiting for bidders to determine their exact valuation. One solution that has been used in practice is to post prices for the bidders, without collecting any information from the bidders, and ask for their immediate take-it-or-leave-it response.
Our paper compares the expected revenue in full-revelation auctions to that in posted-price auctions. We focus on single-item auctions in a Bayesian model where the values that the bidders are willing to pay for the item are independently identically distributed according to a known distribution.
This paper provides an exact asymptotic characterization of the optimal expected revenue achieved by each one of the above auctions. For posted price auctions, we also present the exact prices that achieve the optimal results.Our results are given up to terms with lower asymptotic order, that is, up to factor of 1--o(1). We provide two sets of results; one for distributions on a support that is bounded from above, and a second set for distributions on unbounded supports. In the first case we require a mild assumption on the way the distribution function approaches the end of the support, called the first von Mises condition; the latter case requires a similar mild condition called the second von Mises condition. These very weak conditions are taken from works on extreme-value theory and highest-order statistics.

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  • (2023)Boundedly Rational Agents in Sequential Posted Pricing连续报价拍卖场景中有限理性智能体的研究Journal of Shanghai Jiaotong University (Science)10.1007/s12204-023-2681-0Online publication date: 13-Dec-2023
  • (2021)Posted Price Mechanisms and Optimal Threshold Strategies for Random ArrivalsMathematics of Operations Research10.1287/moor.2020.110546:4(1452-1478)Online publication date: 1-Nov-2021
  • (2021)Optimal Pricing for MHR and λ-regular DistributionsACM Transactions on Economics and Computation10.1145/34344239:1(1-28)Online publication date: 2-Jan-2021
  • Show More Cited By

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    cover image ACM Conferences
    EC '08: Proceedings of the 9th ACM conference on Electronic commerce
    July 2008
    332 pages
    ISBN:9781605581699
    DOI:10.1145/1386790
    Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than ACM must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected]

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    Publication History

    Published: 08 July 2008

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    Author Tags

    1. first order statistics
    2. mechanism design
    3. posted prices
    4. secretary problems
    5. single-item auctions
    6. von mises

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    EC '08
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    EC '08: ACM Conference on Electronic Commerce
    July 8 - 12, 2008
    Il, Chicago, USA

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    Overall Acceptance Rate 664 of 2,389 submissions, 28%

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    Cited By

    View all
    • (2023)Boundedly Rational Agents in Sequential Posted Pricing连续报价拍卖场景中有限理性智能体的研究Journal of Shanghai Jiaotong University (Science)10.1007/s12204-023-2681-0Online publication date: 13-Dec-2023
    • (2021)Posted Price Mechanisms and Optimal Threshold Strategies for Random ArrivalsMathematics of Operations Research10.1287/moor.2020.110546:4(1452-1478)Online publication date: 1-Nov-2021
    • (2021)Optimal Pricing for MHR and λ-regular DistributionsACM Transactions on Economics and Computation10.1145/34344239:1(1-28)Online publication date: 2-Jan-2021
    • (2021)Improved Prophet Inequalities for Combinatorial Welfare Maximization with (Approximately) Subadditive AgentsJournal of Computer and System Sciences10.1016/j.jcss.2021.08.003Online publication date: Sep-2021
    • (2021)Fixed-Price Diffusion Mechanism DesignPRICAI 2021: Trends in Artificial Intelligence10.1007/978-3-030-89188-6_4(49-62)Online publication date: 25-Oct-2021
    • (2020)The Value of Observability in Dynamic PricingProceedings of the 21st ACM Conference on Economics and Computation10.1145/3391403.3399489(275-290)Online publication date: 13-Jul-2020
    • (2020)Approximately Efficient Two-Sided Combinatorial AuctionsACM Transactions on Economics and Computation10.1145/33815238:1(1-29)Online publication date: 11-Mar-2020
    • (2020)Subgame Perfect Equilibria of Sequential Matching GamesACM Transactions on Economics and Computation10.1145/33737177:4(1-30)Online publication date: 30-Jan-2020
    • (2020)Pricing Multi-Unit MarketsACM Transactions on Economics and Computation10.1145/33737157:4(1-29)Online publication date: 30-Jan-2020
    • (2019)Pricing for online resource allocationProceedings of the Thirtieth Annual ACM-SIAM Symposium on Discrete Algorithms10.5555/3310435.3310554(1962-1981)Online publication date: 6-Jan-2019
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