The Simple Economics of Optimal Auctions
- 1 October 1989
- journal article
- Published by University of Chicago Press in Journal of Political Economy
- Vol. 97 (5) , 1060-1090
- https://doi.org/10.1086/261643
Abstract
We show that the seller's problem in devising an optimal auction is virtually identical to the monopolist's problem in third-degree price discrimination. More generally, many of the important results and elegant techniques developed in the field of mechanism design can be reinterpreted in the language of standard micro theory. We illus- trate this by considering the problem of bilateral exchange with pri- vately known values.Keywords
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