Affiliation:
1. Duke University, Chicago, IL
2. Shanghai University of Finance and Economics, Shanghai, China
3. Duke University
Abstract
We study a classic Bayesian mechanism design setting of monopoly problem for an additive buyer in the presence of budgets. In this setting, a monopolist seller with
m
heterogeneous items faces a single buyer and seeks to maximize her revenue. The buyer has a budget and additive valuations drawn independently for each item from (non-identical) distributions. We show that when the buyer’s budget is publicly known, it is better to sell each item separately; selling the grand bundle extracts a constant fraction of the optimal revenue. When the budget is private, we consider a standard Bayesian setting where buyer’s budget
b
is drawn from a known distribution
B
. We show that if
b
is independent of the valuations (which is necessary) and distribution
B
satisfies monotone hazard rate condition, then selling items separately or in a grand bundle is still approximately optimal.
Publisher
Association for Computing Machinery (ACM)
Subject
Computational Mathematics,Marketing,Economics and Econometrics,Statistics and Probability,Computer Science (miscellaneous)
Cited by
1 articles.
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