Dynamic Pricing and Auction - Department of Industrial Engineering ...

Auction mechanism designgoals• Pareto efficiency◦ Design an auction that results in a Pareto efficientoutcome◦ The item under consideration goes to the person whoneeds it most (He may not pay the highest amount)◦ After trade should not be possible• Profit maximization◦ Design an auction that yields the highest expectedprofit to the seller◦ The item should go to the person who pays the highestamount.