On optimal reservation prices in auctions
Management Science
Designing online auctions with past performance information
Decision Support Systems
Allocating online advertisement space with unreliable estimates
Proceedings of the 8th ACM conference on Electronic commerce
Online Auction and List Price Revenue Management
Management Science
Bidding for Representative Allocations for Display Advertising
WINE '09 Proceedings of the 5th International Workshop on Internet and Network Economics
Ex Ante Information and the Design of Keyword Auctions
Information Systems Research
Design of online auctions: Proxy versus non-proxy settings
Decision Support Systems
Pricing Digital Goods: Discontinuous Costs and Shared Infrastructure
Information Systems Research
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The majority of academic papers on the Internet auction design do not distinguish between the auctioneer and the object owner, whereas nowadays leading Internet auction websites operate primarily as mediators that provide the platforms with no physical possessions of the auction objects. The role separation between the auctioneer and the object owner (seller) creates both incentive misalignment and information asymmetry issues. In this paper, we acknowledge this role separation and study the optimal (revenue-maximizing) auction mechanism from the mediator's perspective, taking into account the costly participation from both the sellers and the buyers. We show that the mechanism induces participation from low-valuation sellers and high-valuation buyers. Compared with the conventional seller-optimal auction, the seller in the mediator-optimal mechanism keeps the object more frequently ex post because the mediator intentionally compensates the seller for withholding the object. This exacerbated ex post allocative inefficiency also gives rise to too little ex ante participation for both the seller and the buyers. We propose a simple two-stage mechanism for implementation that is reminiscent of some widely observed Internet auctions. Our qualitative results are robust against model variations such as heterogeneous participation costs, multiple units, and multiple sellers.