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Send mixed signals : earn more, work less

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Emek et al presented a model of probabilistic single-item second price auctions where an auctioneer who is informed about the type of an item for sale, broadcasts a signal about this type to uninformed bidders. They proved that finding the optimal (for the purpose of generating revenue) pure signaling scheme is strongly NP-hard. In contrast, we prove that finding the optimal mixed signaling scheme can be done in polynomial time using linear programming. For the proof, we show that the problem is strongly related to a problem of optimally bundling divisible goods for auctioning. We also prove that a mixed signaling scheme can in some cases generate twice as much revenue as the best pure signaling scheme and we prove a generally applicable lower bound on the revenue generated by the best mixed signaling scheme.
Original languageEnglish
Title of host publicationEC '12 Proceedings of the 13th ACM Conference on Electronic Commerce
EditorsBoi Faltings, Kevin Leyton-Brown, Panos Ipeirotis
Number of pages14
PublisherAssociation for Computing Machinery
Publication year2012
ISBN (print)978-1-4503-1415-2
Publication statusPublished - 2012
EventACM Conference on Electronic Commerce - Valencia, Spain
Duration: 4 Jun 20128 Jun 2012
Conference number: 13


ConferenceACM Conference on Electronic Commerce

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