Dynamic slot allocations with different patience levels

Abstract

This study considers a mechanism design problem in which service slots are allocated over time to buyers arriving in different periods. Buyers have a multidimensional type representing their valuation and patience level. Some buyers can accept delayed service, whereas others cannot. The seller fully commits to a deterministic mechanism. We show that a mechanism is periodic ex-post incentive compatible if and only if the allocation rule is monotone in valuation and “price equivalence” holds. The dynamic pivot mechanism with reserve prices maximizes the seller's expected revenue if and only if the virtual valuation function is affine.