Dynamic allocation and pricing: A mechanism design approach
Dynamic allocation and pricing: A mechanism design approach
This paper illustrates the benefits of applying mechanism design techniques to questions in revenue management, in particular to dynamic allocation and pricing problems. It is demonstrated that the solution to a sequential stochastic assignment problem under complete information can also be implemented under incomplete information by a variation of the Vickrey–Clarke–Groves mechanism. More generally, we argue that the mechanism design focus on implementable allocations rather than on prices yields many valuable insights about dynamic RM models. Finally, we also briefly survey some of the recent literature on dynamic mechanism design.
Highlights
► We apply mechanism design tools to sequential assignment problems. ► We compare welfare in static and dynamic environments. ► We construct payoffs that sustain the optimal allocation. ► We draw parallels to revenue maximization and consider learning. ► We survey the recent literature.
283-286
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex
214a0b5e-c742-486d-b910-c8ec702c943a
Moldovanu, Benny
f84fdd42-3143-4219-be24-fb26385b106d
Gershkov, Alex and Moldovanu, Benny
(2012)
Dynamic allocation and pricing: A mechanism design approach.
International Journal of Industrial Organization, 30 (3), .
(doi:10.1016/j.ijindorg.2011.12.008).
Abstract
This paper illustrates the benefits of applying mechanism design techniques to questions in revenue management, in particular to dynamic allocation and pricing problems. It is demonstrated that the solution to a sequential stochastic assignment problem under complete information can also be implemented under incomplete information by a variation of the Vickrey–Clarke–Groves mechanism. More generally, we argue that the mechanism design focus on implementable allocations rather than on prices yields many valuable insights about dynamic RM models. Finally, we also briefly survey some of the recent literature on dynamic mechanism design.
Highlights
► We apply mechanism design tools to sequential assignment problems. ► We compare welfare in static and dynamic environments. ► We construct payoffs that sustain the optimal allocation. ► We draw parallels to revenue maximization and consider learning. ► We survey the recent literature.
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e-pub ahead of print date: 4 January 2012
Identifiers
Local EPrints ID: 503654
URI: http://eprints.soton.ac.uk/id/eprint/503654
ISSN: 0167-7187
PURE UUID: c2752d33-0bd9-408a-ab6c-3292f7dbd497
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Date deposited: 08 Aug 2025 16:31
Last modified: 09 Aug 2025 02:19
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Contributors
Author:
Alex Gershkov
Author:
Benny Moldovanu
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