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by Andrew V. Goldberg, Jason D. Hartline, Andrew Wright
In Proc. 12th Symp. on Discrete Alg
http://www.intertrust.com/star/tr/tr-99-01.ps
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Abstract:
We study a class of single round, sealed bid auctions for items in unlimited supply such as digital goods. We focus on auctions that are stable and competitive. Stable auctions encourage bidders to bid their utility; competitive auctions yield revenue that is within a constant factor of the revenue for optimal xed pricing. We show that for any stable auction, even a multiple-price auction, the expected revenue does not exceed that for optimal xed pricing. We also give a bound on how far the revenue for optimal xed pricing can be from the total market utility. We show that several randomized auctions are stable and competitive under certain assumptions, and that no stable deterministic auction is competitive. We present simulation results which conrm that our auctions compare favorably to xed pricing. Some of our results extend to bounded supply markets, for which we also get stable and competitive auctions.
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