Linde Institute/Social and Information Sciences Laboratory (SISL) Seminar
We study the mechanism design problem for the seller of an indivisible good in a setting where buyers can purchase the additional information and refine their valuations for the good. This is motivated in part by information structures that appear in online advertising where advertisers can target certain demographics of users using cookie-matching services. For this setting, we propose a rich class of dynamic mechanisms, called Sequential Weighted Second-Price, which encompasses the optimal and the efficient mechanisms as special cases.
We show that because information is costly, in the optimal and even the efficient mechanisms, not all the buyers would obtain the additional information. We also present a class of parameterized mechanisms that extends the commonly used second-price auction to dynamic settings with information acquisition. In our numerical experiments, we show that this mechanism can yield more than 95% of the optimal revenue.
This is based on joint work with Negin Golrezaei